Methods and Systems for Market Clearance

ABSTRACT

In a marketplace, offers are processed that are intended to be associated with other offers in a pool. The offers specify conditions for acceptance. Improvable offers are received that are capable of being associated with offers having more favorable specifications than initial offers associated with the improvable offers. Nonimprovable offers that have more favorable specifications than initial offers associated with improvable offers are identified. The identified nonimprovable offers are associated with corresponding improvable offers. Straddles, which comprise a set of offers and a limit on the associations, may span multiple pools. Information about the marketplace may be obtained from data generated by the operation of the marketplace.

This application is a divisional of U.S. application Ser. No.09/726,573, filed Dec. 1, 2000, which claims the benefit of U.S.provisional application No. 60/169,338, filed on Dec. 6, 1999, both ofwhich are incorporated by reference herein in their entireties.

FIELD OF THE INVENTION

The present invention relates to electronic commerce over a network,such as the Internet or the public telephone network. More specifically,the invention relates to methods and systems for market clearance thataggregate demand and supply in a marketplace and that generate accuratereal-time valuable marketplace information.

BACKGROUND OF THE INVENTION

The Internet is a worldwide network of interconnected computers and isgaining acceptance as a medium for facilitating commercial transactions.Many methods used to carry out business transactions via the Internetgenerally correspond to those used in pre-Internet commerce. Suchmethods may employ various market-clearing mechanisms within the contextof a marketplace.

A marketplace is a location where multiple buyers and multiple sellerstransact business. A market-clearing mechanism identifies a buyer and aseller and sets the price for each transaction in the marketplace. Thekind of market-clearing mechanism to use for a particular marketplace islargely determined by whether the marketplace serves one or manypotential buyers or sellers.

In one type of a marketplace, a single buyer and a single seller attemptto complete a sale. Once the buyer and seller are identified, the onlytask remaining for the market-clearing mechanism is to set the price. Inthis situation, the traditional and appropriate price-setting mechanismis one-on-one negotiation, in which the buyer and seller negotiate untilthey reach a mutually acceptable price or decide not to complete thetransaction.

In another type of a marketplace, multiple buyers and a single sellerattempt to conduct business. There are multiple potential buyers andonly one seller here. Therefore, the market-clearing mechanism mustdetermine the buyer and price. This kind of commerce is fundamentallyseller-driven. The seller chooses the product, sets the transactionterms and seeks market venues where it can achieve the highest price.Two common venues are retail sales and auctions, also referred to as“forward auctions,” in contrast to “reverse auctions” discussed below.

In an ordinary retail sales setting, a seller offers a specific productat a posted price. Those persons who are willing to pay the posted pricemay purchase the product, and those who are not willing to pay theposted price may choose not to purchase the product.

In one form of retail price setting that has become popular on theInternet, retailers publish a stepped-price schedule for a product thatmay be purchased during a period determined by the retailer. Someexamples of this type of on-line retailing are Mercata(“www.mercata.com”), MobShop (“www.mobshop.com”), and Volumebuy(“www.volumebuy.com”). These systems implement the traditional retailvenue with a pricing twist. The price paid by each buyer is a functionof the total quantity of product sold during the purchase period. Theprice declines as the total quantity sold increases. The primaryeconomic value of this pricing method is that it encourages buyers torecruit other buyers and reduces the customer acquisition costs of theseller. Note that the retailer is motivated to set the pricing steps tomaximize its profits, not the buyers' savings. With no competitivebidding among multiple sellers, there is no assurance that the postedprice is competitive.

Another venue is an auction in which buyers have a limited biddingperiod to offer a price for a seller's product. In an auction, multiplebuyers bid for the product and the price rises during the biddingperiod. While bidding may start at a very low price, the seller has theoption of setting a “reserve price” below which the seller will not haveto complete the sale. The transacting buyers will be those buyersoffering the highest prices that equal or exceed the seller's reserveprice.

Forward auctions may take various forms, and the specific form of anauction will depend upon the amount of available product and the goalsof the seller and the prospective buyers. If there is only one unit of aproduct, then the single highest bidder will be the only transactingbuyer.

When there are multiple available units and multiple potential buyers,variations of the basic auction format may be used. In one popular form,the transacting buyers are the N highest bidders who will consume theavailable N-unit supply of product. They will each pay their bid price.Thus, different buyers may pay different prices. In another form, knownas a “Dutch auction,” the transacting buyers are the N highest bidderswho will consume the available supply of product and they all pay oneprice, the lowest price bid by any of the transacting buyers. Auctionscan have many variations on these basic themes. The essence of anauction is that multiple buyers bid increasing prices for the productsof one seller and that offers to buy and sell are binding upon thebuyers and seller.

There is no mechanism in these traditional single-seller auctions toautomatically consolidate demand to produce lower prices. Aggregatingdemand at an auction would raise prices rather than lower them, asincreasing demand seeks limited supply. Auctions have become popular onthe Internet. Ebay is the current dominant auction site and offers avariety of auctions including Dutch auctions. Ebay can be found on theWorld Wide Web at URL “www.ebay.com”.

When one buyer attempts to do business with multiple potential sellers,a market-clearing mechanism must determine seller and price. This kindof commerce is fundamentally buyer-driven. The buyer chooses theproduct, sets the transaction terms, and seeks market venues in which itcan achieve the lowest price. There are two classes of appropriatemechanisms: a Request for Quotation (RFQ), also referred to as a Requestfor Price (RFP), and a reverse auction.

An RFQ is an offer to buy that is published to many prospective sellers.Sellers bid for the business. The buyer typically chooses the sellerbased on price and other criteria. RFQ's may or may not constitute abinding offer to buy. RFQ's and RFP's are popular commerce vehicles forlarge buyers (e.g., governments and large corporations) who have asufficiently large order to attract sellers and to justify the cost ofpublishing the RFQ.

In a reverse auction, multiple sellers bid for a buyer's order and pricedeclines during the bidding period. The transacting sellers will bethose sellers offering the lowest prices that are equal to or below thebuyer's reserve price (the setting of a reserve price is optional). Asis the case with a “forward” auction, the specific form of a reverseauction will depend upon the amount of product desired by the buyer andthe goals of the prospective sellers and the buyer. The variations foundamong reverse auctions are primarily the inverse images of thevariations of forward auctions (including the potential for the buyer toset a reserve price above which it will not transact). The essence of areverse auction is that multiple sellers bid decreasing prices for thebusiness of one buyer and that offers to buy and sell are binding uponthe buyer and sellers.

Priceline (“www.priceline.com”) is a buyer-driven marketplace that hascombined the communications connectivity of the Internet with essentialelements of a fixed-price RFQ and a reverse auction to let a buyer nameits own price. Priceline primarily creates a market in time-sensitiveperishable products. A buyer submits a one-time, binding, fixed-priceRFQ at a buyer-determined price. Priceline then could use a reverseauction to find a seller willing to sell at or below the buyer's fixedprice. Or Priceline could buy the product at the lowest price availablein the market and sells it to the buyer at the buyer's price. Of course,Priceline could also extract a fixed or variable transaction feeinstead. Or, these fees could be included in the bid price, effectivelyreducing the price offered. Notably, these fees are independent of themarket-clearing method they have chosen.

Priceline is the seller in a single-buyer, fixed-price RFQ system thathas at least three major deficiencies. First, Priceline does notconsolidate demand, since it provides product to only a single user at atime. Second, it offers no opportunity to achieve a lower price than thebuyer's fixed offering price, should such a price be available in themarket. Therefore it motivates postured prices, not the real price abuyer is willing to pay, since the buyer generally bids a lower pricethan it would actually pay to compensate for the uncertainty, lack ofspecificity in defining the product (e.g., non-stop-flight or onlyAmerican or United Airlines), and the cost of a commitment with nomarket information. Finally, it cannot produce price-elasticityinformation since systems that motivate postured pricing do not know thetrue maximum prices buyers would pay. Although Priceline isbuyer-driven, it is seller-biased, meaning that transactions aregenerally priced above the lowest available market price.

If there are multiple potential buyers and multiple potential sellersfor a product or service, then a market-clearing mechanism mustdetermine buyer, seller, and price. The traditional market-clearingmechanism used for such marketplaces is a bid-ask exchange mechanism. Ina bid-ask exchange, multiple buyers each offer their own bindingcommitments to buy at their own stated bid prices. Multiple sellers eachoffer their own binding commitments to sell at their own stated askprices. The bid-ask exchange mechanism clears a transaction at thebid-ask price when there is a bid price that equals an ask price. Ifthere are multiple bids or multiple asks at the same price, then theexchange must decide which clears first. In less-automated exchanges,this is done by open out cry. In more-automated exchanges, it is done inthe order of the time the offer was entered into the exchange. When abid price is less than an ask price, no transaction clears. When a bidprice exceeds an ask price, then the bid-ask exchange mechanism mayclear the transaction at some price between the bid and ask price.However, bids do not exceed asks in practice, because the highestcurrent bid and the lowest current ask are usually published. Buyershave no motivation to offer a higher bid than the lowest current ask.Similarly, sellers have no motivation to offer a lower ask than thehighest current bid.

A bid-ask exchange is a marketplace where the buyer's offer is a bindingoffer to buy at a fixed price, and the seller's offer is a binding offerto sell at a fixed price. The buyer offer is essentially a bindingfixed-price RFQ that goes to the first seller to meet the fixed price.The seller offer is similar to a retailer's offer to sell at a fixedprice. Ultimately, the nature of the commerce that emerges isone-to-one.

The bid-ask exchange is a meeting place where buyers and sellers canefficiently find each other, post prices, and conduct one-to-onetransactions. The bid-ask exchange works best for standard commoditieswhere prices do not differ based on fulfillment costs, which couldinclude shipping, tax, insurance, or service contracts. An all-in priceis a price that includes all costs (base product, features and options,and fulfillment). All-in pricing can be used to overcome problemsintroduced by differences in actual cost based on variations in selectedoptions and fulfillment expenses. However, all-in pricing istraditionally not used in bid-ask exchanges. In exchanges such as theNASDAQ stock exchange, commissions are added after prices are set.All-in pricing would include these additional costs.

The present invention overcomes the deficiencies in knownmarket-clearing mechanisms by enabling a new form of multi-buyer,multi-seller exchange that is well-suited to group buying and groupselling using demand aggregation and supply aggregation. When used forgroup-buying, the market-clearing methods and systems of the inventionenable otherwise unrelated buyers to aggregate their purchases to createa larger order that sellers can price more efficiently. Sellers thencompetitively bid for the larger order. When used for group-selling, themarket-clearing methods and systems of the invention enable otherwiseunrelated sellers to aggregate their inventories to create sufficientsupply to meet the needs of a buyer that none of the sellers alone couldserve. Buyers then competitively bid for the aggregate inventory.

The present invention enables the creation of an exchange that may berun by a marketplace operator that may be a participant, a third party,or a technology provider. Exchanges consistent with the presentinvention comprise a meeting place where buyers and sellers canefficiently find each other, make individual offers to buy and sellproducts with varying attributes at varying prices with varyingfulfillment costs, aggregate their collective demand or supply, andproduce many-to-many transactions at multiple prices at the same time.

Group buying existed as a form of commerce prior to the emergence of theInternet. For example, group buying has long been used by natural foodcooperatives. A natural food co-operative performs important functionsfor both buyers and sellers. Individual buyers of natural foods may nothave an order large enough to economically attract any seller, much lessa favorably-priced seller. By pooling their demand, natural food buyersachieve at least two goals: (i) they make it economically attractive forsellers to supply products they desire; and (ii) they get favorableprices in a marketplace e where multiple sellers compete for theirbusiness.

Group buying holds promise for significantly increased economicefficiency for buyers and sellers. Group buying enables low-volumebuyers to achieve high-volume discounts. Group buying creates largerorders for sellers. A larger order lowers the seller's per-unit cost byenabling the seller to spread fixed costs over more units. At the sametime, the increase in units sold creates the potential for greateraggregate profit.

For example, a seller's marketing costs may be constant and represent10% of the seller's total cost in a typical sale. If market demand wouldbe doubled at a 5% lower price, with no increase in marketing costs, aseller could price its product 5% lower to realize that demand. At a 5%lower price, the seller doubles its sales. By spreading fixed costs overtwice as many units, the seller maintains its per-unit profit anddoubles its total profit, while simultaneously giving the buyer asignificant discount.

Group buying is especially attractive for commerce in products that arerelatively standardized, are sold in high volume, have high fixed costs,and have low variable costs. The ability of a group-buying marketplaceto realize the economic potential of group buying is proportional to thesize of its buying groups. Larger groups create greater benefits forbuyers and sellers.

Group buying has not been a widely accepted form of commerce since theimproved economic efficiency of group buying was not available to buyersand sellers prior to the existence of a ubiquitous communicationmechanism like the Internet. It was too costly for like-minded buyers tofind each other and create buying groups. It was too costly for sellersto find and bid for the business of buying groups. The cost of forminglarge groups was prohibitive.

With the low-cost universal connectivity of the Internet, the barriersto forming buying groups have fallen and group-buying marketplaces haveemerged to meet the needs of buyers and sellers. These have taken atlease two forms, including interest it aggregators and demandaggregators.

Interest aggregators aggregate non-binding expressions of buyerinterest. Demand aggregators aggregate binding offers to buy. Demandaggregators are of much greater interest to sellers and can producebetter prices. For example, if a demand aggregator presents an offer tobuy 500 aggregated units of a product, sellers can safely bid aggressivehigh-volume, 500-unit prices for the product. If an interest aggregatorpresents a similar non-binding offer to buy, the seller does not know ifzero or 500 or some other number of units will ultimately trade. Theseller faces the risk of losing money if it bids a low 500-unit pricebut ultimately transacts materially fewer units. Sellers will normallyavoid this risk by offering higher prices that will be profitable evenat smaller quantities.

Demandline (“www.demandline.com”) is an example of an interestaggregator that pools the demand of multiple buyers, each of whom stateits desired purchase price. Demandline personnel then negotiate with awell-known supplier on behalf of the buyer pool to achieve the priceeach buyer requests. Demandline targets larger purchasers of businessproducts and services for which there are a several major recognized orreputable suppliers, for example, long distance telephone services orretail gasoline.

Examples of demand aggregators include ActBig (“www.actbig.com”) andShop2gether (“www.shop2gether.com”), which target individual purchasersof consumer products and small business purchasers of office products,respectively.

All group-buying marketplaces today have a similar structure. They formgroups of buyers of an identical product and solicit sellers to bid forthe group order. The group determines a bidding period and typicallysets an initial maximum price that all bidding sellers must meet orbeat. In essence, the group becomes a single buyer and multiple sellersbid for the entire group's business. This de facto single-buyer,multiple-seller market motivates the use of a reverse auction todetermine the winning seller and price.

In the idealized group-buying scenario, a few buyers form a buyinggroup. Sellers bid a lower price for the group order than they would bidfor any individual buyer's business. Other buyers join the buying groupto take advantage of the lower price. The buying group becomes largerand attracts even lower bids that, in turn, attract more buyers. Theresult is that the group grows larger and price drops lower during thebidding period.

Unfortunately, this idealized scenario faces four problems that impedethe formation of large buying groups and preclude the realization of thescenario. First, the cycle of larger groups and lower prices cannot getstarted because the reverse auction motivates contrary buyer and sellerbehavior. Consider the seller's motivation in a reverse auction. Theoptimal bidding strategy is to make exactly one bid—the last and lowestbid. Sellers have no motivation to bid early. As a result, ever-lowerprices are not bid, because sellers wait to bid. Without lower prices,more buyers do not join the group. As a result, buying groups staysmall, and no time remains in the bidding period for additional buyersto join when seller bids arrive shortly before the close of the biddingperiod. Therefore, there is a need in the art for a new market-clearingmechanism that motivates aggressively-priced buyer and seller offersearly in the bidding period.

Second, using a reverse auction to clear the market fragments largergroups into smaller groups. To have orderly pricing in a reverseauction, all buyers in a group must buy the identical product underidentical terms. Otherwise, the sellers lack a consistent basis on whichto bid for the entire group's “single-buyer” order. The requirement forbuying the identical product under identical terms forces the buyer of acopier with a 20-sheet collator to be placed in a different group from abuyer of the same copier with a 10-sheet collator. But the seller wouldhave lower overall costs and the buyers could get lower prices if bothcould be kept in the same group. Therefore, there is a need in the artfor a market clearing mechanism that does not fragment groups of buyersof similar but not identical products that could all be supplied by asingle seller.

Third, buyers normally exercise individual choice in many dimensionswhen making a purchase. Ordinarily, buyers choose their own productfeatures and purchase terms. They consider the pricing implications ofalternative feature sets and purchase terms and evaluate their availabletradeoffs across brands before committing to a specific productpurchase. Fewer buyers will join buying groups that do not provide theirexpected choices and tradeoffs when making a purchase. Many buyersresist the requirement to purchase the identical product under identicalterms. Restricting buyer choices and tradeoffs attracts fewer buyers andthis results in smaller buying groups. Therefore, there is a need in theart for a market clearing mechanism that preserves buyers' choices,while still enabling them to purchase as a group.

Fourth, there is no good choice for the single price to be used in areverse auction. If the price is based on the product price alone, thenfulfillment costs are outside of the competitive bidding process. Inthis case, the optimum seller strategy is to bid very low prices for theproduct and then charge high prices for fulfillment. On the other hand,if the price basis is “all-in,” that is, it includes all costs includingfulfillment, then sellers are motivated to bid high out of concern thata disproportionate number of buyers may have high fulfillment costs(e.g., delivery costs to distant locations, taxes in localjurisdictions, insurance to buyers with higher risk). It is possible tofragment a buying group into smaller groups of buyers so that all buyersin the smaller group have the same fulfillment costs (e.g., all in oneZip Code). Then sellers can bid their lowest all-in price, because thereis no risk of adverse fulfillment costs. But doing so fragmentsnaturally larger buying groups into smaller regional groups that producesmaller orders. The fragmentation precludes the economic benefits that alarge order would create for both buyers and sellers. Therefore, thereis a need in the art for a market clearing mechanism that allows forvariable fulfillment costs within the same group to enable the formationof larger groups with better economics.

At the root of these problems is the use of a market-clearing mechanismthat requires a seller to bid a price that applies uniformly to allbuyers and that motivates sellers, and hence buyers, to wait until thelast minute before making an offer to sell or buy. Reverse auctions,bid-ask exchanges, and forward auctions all have the single-priceproblem and all tend to discourage early offers by buyers or sellers. Anew form of market-clearing mechanism is needed that (i) accommodatesvariable pricing, including variable all-in pricing; and (ii) motivatesboth buyer and seller behaviors to create the large groups that maximizethe economic efficiency of group buying.

Additionally, a group-buying marketplace can operate more efficiently ifsellers know the price elasticity of demand or the committed number ofunits that will sell at any given price. Accurate price-elasticityinformation allows a seller to lower its price with the knowledge thatthe corresponding increase in sales will justify the decrease in price.Also, accurate price-elasticity information allows a seller to avoidneedlessly lowering its price when the price reduction will produceinsufficient incremental sales to justify the price decrease.

Group-selling marketplaces are attractive to small producers and otherswho can form cooperatives to share common facilities and to aggregatetotal supply to attract more or larger buyers. Small agriculturalproducers of dairy and grain products have historically formed suchcooperatives.

Similar to group-buying marketplaces, the Internet also enables thecreation of efficient group-selling marketplaces that can efficientlyprice suppliers' aggregated supply. The issues of forming agroup-selling marketplace are similar to those of a group-buyingmarketplace. Especially relevant is the necessity to (i) allow forvariable prices among aggregated sellers in order to form larger groupsand produce more efficient pricing for all parties; and (ii) to motivatebuyer and seller behaviors that produce earlier offers.

Group-selling marketplaces differ from group-buying marketplaces in thata group-selling marketplace works well for commerce in standardizedproducts that have limited supply, or whose cost of production increaseswith volume, for example, crude oil, commodity crops, and dairyproducts.

Bid-ask exchanges, auctions, and reverse auctions only discover thehistorical demand for products at previously demonstrated transactionprices. They cannot tell buyers and sellers how much product will tradeat prices above or below those already demonstrated in the marketplace.Hence bid-ask exchanges, auctions, and reverse auctions cannot givesellers the information they need to determine the economic desirabilityof bidding prices lower than those previously transacted. But this isprecisely the information needed to drive a maximally efficientmarketplace.

None of the previously existing forms of a marketplace produce accuratereal-time price elasticity for either demand or supply. Marketparticipants normally invest in economic models to predictprice-elasticity. Building such models is especially difficult forpredicting demand at prices below those historically transacted or forpredicting supply at prices above those historically transacted. Systemsand methods consistent with the present invention can create accurateprice-elasticity information in real-time for demand or supply so thatthe operation of a marketplace can approach optimal economic efficiency.

SUMMARY OF THE INVENTION

The basic components of a market-clearing mechanism, consistent with thepresent invention, are offers, pools, straddles, and locks. Marketclearing occurs within a pool, which consists of buy offers, selloffers, and a close event. A close event is a specific time orpredetermined event, the occurrence of which can be ascertained.

Market-clearing mechanisms, consistent with the present invention,determine buyer, seller, and price by matching buy offers with selloffers in a multi-stage locking process. Offers lock to, unlock from,and relock to each other during an offering period that terminates atthe occurrence of a close event for a pool. A pair of locked offerscomprises one buy offer locked to a corresponding sell offer. Everylocked offer-pair has a lock price determined by the terms of the lockedoffers and their sequence of locking. At the close of a pool, all lockedoffer-pairs become transactions at their respective lock prices.

Pools are either buyer-advantaged or seller-advantaged. In a given pool,the lock prices of advantaged offers improve during an offering period.Lower prices are more favorable to buyers and higher prices morefavorable to sellers. Thus, in a buyer-advantaged pool, prices locked toindividual buy offers decrease during the offering period, as lower selloffers are received. In a seller-advantaged pool, prices locked toindividual sell offers will increase during the offering period, ashigher buy offers are received. For purposes of the consideration ofmarket-clearing mechanisms consistent with the present invention, it ispossible to consider buyer-advantaged and seller-advantaged marketsgenerally. The term advantaged offer (“AO”) refers to an offer thatcorresponds to a buy offer in a buyer-advantaged market or a sell offerin a seller-advantaged market, and the term disadvantaged offer (“DO”)refers to a sell offer in a buyer-advantaged market or a buy offer in aseller-advantaged market. Advantaged offers are applied to availabledisadvantaged offers in the order in which the advantaged offers arereceived.

Advantaged offers may include a reserve price, which is the leastfavorable price at which an advantaged offer or is willing to transact.A reserve price is the lowest price at which advantaged sell offers willsell and the highest price at which advantaged buy offers will buy. In amarket-clearing mechanism consistent with the present invention, thereserve price serves only the function of determining the first lock ofan advantaged offer. Thereafter, advantaged offers may unlock and relockat increasingly more favorable lock prices, and reserve price is not afactor in the locking process after the first lock.

Reserve prices can be either honest or postured. An honest reserve priceis the least favorable price at which the offeror is willing totransact. A postured reserve price is a price that is more favorable tothe offeror than the offeror's honest reserve price.

Price-setting methods and processes of an embodiment consistent with thepresent invention have four key properties that motivate honestbehaviors by advantaged offerors. First, overall market forces and notindividual reserve prices determine the final lock price of anadvantaged offer. Second, earlier advantaged offers have first choice atlocking the best disadvantaged offers in the pool, because theopportunity to match a favorably-priced disadvantaged offer is grantedto advantaged offers in the chronological order that the advantagedoffers are received. Third, posting a postured reserve price does notimprove the ultimate price at which an advantaged offeror transacts,because it is the timeliness with which an advantaged offer is made thatdetermines how favorable a transaction an advantaged offeror will make,not the amount of a reserve price. Fourth, posting a postured reserveprice could cause an offeror to miss an opportunity to transact at aprice that is as good or better than the offeror's honest reserve price.

In combination, these attributes strongly motivate advantaged offerorsto post their offers early and to do so at their honest reserve pricerather than a postured price. And, because market-clearing mechanismsconsistent with the present invention create marketplaces with honestreserve prices, these marketplaces produce accurate, real-timeprice-elasticity curves for advantaged offers.

In accordance with the invention, methods and systems are claimedwherein, in a marketplace, offers are processed that are intended to beassociated with other offers. The offers specify acceptable conditionsfor acceptance. Improvable offers are received that are capable of beingassociated with offers having more favorable specifications than initialoffers associated with the improvable offers. Nonimprovable offers thathave more favorable specifications than initial offers associated withimprovable offers are identified. The identified nonimprovable offersare associated with corresponding improvable offers. Straddles comprisea set of offers and a limit on the total number of units or offers thatmay lock across the set of offers within a straddle and may spanmultiple pools and have dependencies. Consistent with the presentinvention, information about market parameters, like price elasticity,may be obtained from data generated by the operation of themarket-clearing system.

Additional objects and advantages of the invention will be set forth inpart in the description which follows, and in part will be obvious fromthe description, or may be learned by practice of the invention. Theobjects and advantages of the invention will be realized and attained bymeans of the elements and combinations particularly pointed out in theappended claims.

It is to be understood that both the foregoing general description andthe following detailed description are exemplary and explanatory onlyand are not restrictive of the invention, as claimed.

The accompanying drawings, which are incorporated in and constitute apart of this specification, illustrate one several embodiments of theinvention and together with the description, serve to explain theprinciples of the invention.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 is a block diagram illustrating a market-clearing systemconsistent with the present invention;

FIG. 2 is a block diagram illustrating a configuration of networkdevices embodying a marketplace consistent with the present invention;

FIG. 3 is a block diagram illustrating the components of an offerconsistent with the present invention;

FIG. 4 is a block diagram illustrating product specifications consistentwith the present invention;

FIG. 5 is a block diagram illustrating quantity specificationsconsistent with the present invention;

FIG. 6 is a block diagram illustrating a pool specification consistentwith the present invention;

FIG. 7 is a block diagram illustrating advantaged offer pricespecifications consistent with the present invention;

FIG. 8 is a block diagram illustrating a disadvantaged offerspecification consistent with the present invention;

FIG. 9 is a block diagram illustrating a pool consistent with thepresent invention;

FIG. 10 is a block diagram illustrating alternative straddle embodimentsconsistent with the present invention;

FIG. 11 is a block diagram illustrating a relationship consistent withthe present invention between exemplary offers, pools, and straddles;

FIG. 12 is a flow diagram illustrating a market-clearing mechanismconsistent with the present invention;

FIG. 13 is a block diagram illustrating a relationship consistent withthe present invention between offerors, system interfaces, andmarketplace operators;

FIG. 13A is a block diagram illustrating a process, consistent with thepresent invention, of accepting requests and generating offers,straddles, and withdrawals;

FIG. 13B is a block diagram illustrating the relationship between aprice schedule and a corresponding set of advantaged offers posted inorder;

FIG. 13C is a block diagram illustrating the relationship between aprice schedule and a corresponding straddle of min-max-quantity offers;

FIG. 14 is a flow diagram of a method consistent with the presentinvention for posting and locking offers;

FIG. 15 is a flow diagram for a method consistent with the presentinvention of generating a lock list for a selected advantaged offer;

FIG. 16 is a flow diagram of a method consistent with the presentinvention for locking an advantaged offer;

FIG. 17 is a flow diagram of a method consistent with the presentinvention of comparing and locking a disadvantaged offer;

FIG. 18 is a flow diagram for a method consistent with the presentinvention of locking a disadvantaged offer;

FIG. 18A is a flow diagram for a method consistent with the presentinvention of unlocking a disadvantaged offer;

FIG. 18B is a flow diagram for a method consistent with the presentinvention of updating the available quantity in a disadvantaged offerfragment;

FIG. 19 is a flow diagram for a method consistent with the presentinvention of relocking a disadvantaged offer;

FIG. 20 is a flow diagram for a method consistent with the presentinvention of posting a straddle;

FIG. 21 is a flow diagram for a method consistent with the presentinvention of posting a withdrawal;

FIG. 22 is a flow diagram for a method consistent with the presentinvention of closing a pool;

FIG. 23 is a block diagram illustrating a potential conflict inherent inthe use of min-max-quantity orders;

FIG. 24 is a block diagram illustrating an alternative embodimentconsistent with the present invention of an offer including a minimumand maximum quantity specification;

FIG. 25 is a flow diagram of an alternative embodiment consistent withthe present invention of a method of locking an advantaged offer;

FIG. 26 is a flow diagram of a method consistent with the presentinvention of locking an advantaged offer to a disadvantaged offer,including the use of potential locks;

FIG. 27 is a flow diagram of a method consistent with the presentinvention of locking an advantaged offer to a disadvantaged offer;

FIG. 28 is a flow diagram of a method consistent with the presentinvention of adding an advantaged offer to the list of potential locksassociated with a disadvantaged offer; and

FIG. 29 is a flow diagram of a method consistent with the presentinvention of locking an advantaged offer and converting all potentiallock fragments to locked fragments.

DETAILED DESCRIPTION

Reference will now be made in detail to embodiments consistent with thepresent invention, examples of which are illustrated in the accompanyingdrawings. Wherever possible, the same reference numbers will be usedthroughout the drawings to refer to the same or like parts.

FIG. 1 is a block diagram illustrating a market-clearing systemconsistent with the present invention. A set of buyers 110 submits buyoffers 150 and buy straddles 160 to the market-clearing engine 185. Aset of sellers 120 submits sell offers 155 and sell straddles 165 to themarket-clearing engine. Market-clearing engine 185 assigns each offer orstraddle to a pool, like the pool described below in connection withFIG. 9, that has a close time consistent with a pool close event. Duringthe period of bidding for each pool, market-clearing engine 185 producesmarket data 174 that are routed to the market information database 140.This market data may include any information about terms and timing ofoffers presented to the market-clearing engine, including offerorbehavior and timing for an offer or across multiple offers, quantities,product specifications, straddles, and transaction information. At theclose of a pool, market-clearing engine 185 produces transactiondirectives 176 that are routed to the transaction information database181.

From market information database 140, buyers, sellers, and othersextract market reports 130 and 135 that can be used to make decisionsabout future offers, to formulate development, manufacturing, andmarketing strategies and tactics, and to support other business planningand decisions. Buyers and sellers receive reports like transactionreports 170 and 172 that describe their respective transactionobligations resulting from their market participation.

A marketplace operator establishes rules that determine whichinformation may be disseminated in Market Reports 130 and 135 andTransaction Reports 170 and 172. A marketplace operator also defines theterms a receiver must accept in order to receive these reports.Marketplace operators may have varying requirements for informationprivacy, timeliness, pricing, analysis, dissemination controls, andother attributes of Market Reports 130 and 135 and Transaction Reports170 and 172.

FIG. 2 is a block diagram illustrating a configuration of networkdevices embodying a marketplace consistent with the present invention.The marketplace includes one or more buyers who may use network devicessuch as buyer terminals 210, 220, and 230 to transmit offers and receivemarket information. Buyer terminals 210, 220, and 230 are connected toand communicate with other terminals via data network 205. Additionally,one or more sellers transmit offers and receive market information onnetwork devices, such as seller terminals 250, 260, and 270, which arealso connected to the data network 205. In an embodiment consistent withthe present invention, data network 205 is the Internet, thus enabling aglobal marketplace. In another embodiment, consistent with the presentinvention, data network 205 is a private network and the marketplace isa private marketplace. In yet another embodiment consistent with thepresent invention, data network 205 is a call center connected to thepublic services telephone network, and terminals 210, 220, 230, 250,260, and 270 are telephones.

Offers are received and processed on one or more network devices such asmarket clearing server 290. Market clearing server 290 operates aclearance mechanism for the marketplace. In an embodiment consistentwith the present invention, offers are recorded on one or moredatabases, like database 280. Database 280 may be also used to storeinformation produced by the operation of the marketplace, such asaccurate real-time price-elasticity data, which may be included inmarket reports 130 or 135 of FIG. 1.

FIG. 3 is a block diagram illustrating the components of an offer,consistent with the present invention. In one embodiment,market-clearing systems use offers, such as offer 302 and associateddata structure 322, which correspond to buy and sell offers, such as buyoffers 150 and sell offers 155 of FIG. 1. In one embodiment, an offerincludes four components: a product specification 306, a quantityspecification 308, a pool specification 310, and a price specification312. For purposes of referencing an offer, offer 302 also includes anoffer identifier such as offer ID 304. Product specification 306,quantity specification 308, pool specification 310, and pricespecification 312 are further described in FIGS. 4-7, respectively.

Data structure 322 provides the offer-related information that is usedby the market-clearing engine to change and track the status of offers.The specific data structure 322 could be used in an embodiment thatsupports a basic quantity specification such as specification 510 (ofFIG. 5) and fragmented locking of offers. An offer fragment is a portionof an offer that records the lock status of a part of the offer thatapplies to, at most, one opposite offer. Straddle ID field 324 is usedto associate an offer with a straddle. Pool ID field 326 is used toassociate an offer with a particular pool. Locked quantity 328represents the quantity within the offer that is currently locked to oneor more opposite offers. Unlocked or available quantity 330 representsthe quantity that remains available for locking to opposite offers.

Fragment list 332 represents a list of fragments corresponding to lockswith opposite offers for quantities less than or equal to the quantityspecified in the offer's quantity specification. Opposite offer IDidentifies the opposite offer if locked, and is null otherwise. Lockstatus values include not-locked, locked, or do-not-relock, which Meansthe fragment is currently locked but should not relock if it unlocks.Lock price is the price at which the fragment last locked and null ifthe product is unlocked (reserve prices and price functions requireseparate data structures in this embodiment). Quantity is the number ofunits of product associated with the fragment. The sum of all fragmentquantities equals the maximum quantity of the offer. Fragments ofadvantaged offers are ordered from worst price to best price fromperspective of advantaged offeror. The null price is worse than anylocked price. No lock price is less favorable than any previous lockprice, and fragments at the same price are sub-ordered from newest tooldest opposite offer.

Consider the following example. A sell offer is posted with a quantityspecification of 5 units maximum. A first buy offer with a quantityspecification of “2 units maximum” locks 2 units of the sell offer's 5units. A second buy offer locks 1 unit, and a third locks 2. In oneembodiment, the information that three buy offers correspond to one selloffer is encoded within the sell offer's data structure using threefragments. When the pool closes, each locked fragment will correspond toa transaction. In this embodiment, the locking process locks fragments,not necessarily entire offers.

In this embodiment, a partially locked offer always has a first fragmentthat corresponds to the not-yet-locked units in the offer. This is alsoimportant to the determination of what constitutes a “locked” offer forthe purposes of a straddle that has a lock limit expressed in terms oflocked offers. In one embodiment, one locked unit means one lockedoffer. In another embodiment, an offer is not locked unless allfragments are locked. Other embodiments are apparent to those skilled inthe art.

FIG. 4 is a block diagram illustrating product specifications consistentwith the present invention. A product specification specifies a product,which may be goods or services, using a standardized system ofclassification. One classification system consistent with the presentinvention uses a set of attribute-value expressions, which comprise aname of an attribute of a product and a particular value of thatattribute. Attribute-value relationship 410 illustrates a productspecification consistent with the present invention. An offeror mayspecify an office copier as follows: copies per minute>22, and collatorsize=20 sheets. In this example, the attribute names 415 and 425 are“Copies per minute” and “Collator size,” respectively, and attributevalues 420 and 430 are “greater than 22” and “equals 20 sheets,”respectively. This product specification would match any brand and typeof copier that copies faster than 22 copies per minute and that has a20-sheet collator.

Alternatively, a buyer may specify a single specific product, perhapsusing a universal product code (UPC). A product specification, likeproduct specification 470, for a Kodak® DC280 Zoom Digital Camera may beUPC=4177893370, where attribute name 475 is “UPC” and value 480 is“4177893370.” A buyer may specify the same product as Brand=Kodak, andModel=DC280 Zoom, in a product specification such as productspecification 440. Here, attribute names 445 and 455 correspond to“brand” and “model,” and values 450 and 460 correspond to “Kodak” and“DC280 Zoom.” In one embodiment, cross-reference indexes provideexpanded attributes for a specific UPC with brand-model specificationsthat match functional product specifications.

A product specification can include the totality of the terms theproduct must meet. So, for example, a product specification may containattributes related to the seller or buyer (e.g., location, creditrating) or delivery, payment service rating or any other terms needed tofully define the product being transacted.

FIG. 5 is a block diagram illustrating a quantity specificationconsistent with the present invention. A quantity specification mayinclude a range corresponding to units of the product as specified inthe product specification. A quantity specification that includes both aminimum and a maximum quantity can be referred to as a min-max quantityspecification. A range that merely specifies a maximum such as the onein quantity specification 510 has an implicit minimum of one and amaximum such as integer maximum 530. In this case, any number of unitsup to the maximum may lock if a corresponding opposite offer becomesavailable. Each unit of product, as specified in the productspecification, corresponds to one unit for the purposes of measuringquantities of the product itself. For example, if a productspecification identifies lots or cases of 144 items of a product, theneach unit of the product corresponds to one lot or case.

In addition to denoting a maximum quantity, min-max quantityspecifications, such as alternative quantity specification 520, alsodenote a minimum quantity of some countable attribute of an offer orstraddle that may have to be available across one or more offers beforeany offer may lock. For example, minimum quantity specifications mayexpress constraints on units of the product of the offer, units lockableon any single opposite offer, number of opposite offers that may belocked, or any other countable attribute of an offer or straddle.

In an alternative embodiment, a quantity specification such as quantityspecification 520 may support a minimum and maximum number of units withminimum-units field 532 and maximum-units field 534. In order to lockany units, minimum quantity from one or more opposite offers, inaggregate, must be able to lock the minimum quantity or more of thepresent offer. A quantity specification may include minimum and maximumnumbers of opposite offerors with minimum-opposite-offerors field 535and maximum-opposite-offerors field 540. This is to facilitate anofferor's request to avoid transactions with too many separate oppositeofferors. A quantity specification may also include minimum and maximumnumbers of opposite offers with minimum-opposite-offer field 545 andmaximum-opposite-offer field 550, which may be used to limit the numberof discrete transactions an offeror will accept. Similarly minimum andmaximum units fields 555 and 560 may be used to control the size ofseparate opposite offers that may lock.

Quantity specification 562 illustrates one use of a min-max quantityspecification that will cause the offer to lock all or none of adesignated number of units. By setting minimum-units-per-opposite-offer564 equal to maximum-units-per-opposite offer 566, any single oppositeoffer must lock exactly the specified number of units or no units.

In one embodiment, an offeror may transact with exactly one respondentat one price using an all-or-noting offer. Alternatively, such an offercould be specified as a single lot. An offeror may also transact withmultiple opposite offerors provided that the offeror's price criteriaare met. In this case, when one offer locks some, but not all of anall-or-nothing bid, other offers must also be immediately available tolock adequate quantity to meet the all-or-nothing criterion. Subsequentoffers may cause an unlocking of part of a locked all-or-nothing offercreating situations that may be resolved as described in conjunctionwith FIG. 23.

FIG. 6 is a block diagram illustrating a pool specification within anoffer consistent with the present invention. A single offer is placedinto a single pool, and a pool ID, such as pool ID 620, may identify asingle pool. Market-clearing systems consistent with the presentinvention utilize discrete pools with discrete pool close times, wherethe close times are determined using rules established by themarketplace operator. A pool can be identified by its close event, suchas close event 630. A pool close event corresponds to a defined eventwhose time of occurrence can be determined with precision, for example:5:00 p.m. PST Wednesday, when 500 offers have locked in this Pool, or4:00 p.m. GMT on the second day after the last game of the 2001 WorldSeries. A pool specification may also include offer restrictions such asoffer restrictions 640. These restrictions may specify offer constraintsbased on, for example, product attributes, quantities, and buyer andseller attributes. Offers that do not meet these restrictions may not beeligible to join the pool. When a pool specification includes an offerrestriction 640, then the pool can be identified by reference to bothits close event 630 and its offer restrictions 640.

Individual marketplace operators may use offer restrictions to imposeconstraints on pool membership. Marketplace operators may have businessreasons to organize pools according to buyer, seller, product, or otherattributes, in addition to the close time. For example, a marketplaceoperator may require that all offers in a pool come from a certaincategory of buyer or seller, or that the offers specify products in thesame product category. A category can be as broad or narrow as themarketplace operator wishes. For example, a product category could beoffice machines or copiers or Xerox® copiers or Xerox small officecopiers or Xerox model 4444 copiers or one specific configuration of aXerox model 4444 copier. Similarly, a buyer category could be used togroup buyers on the basis of their creditworthiness, so that credit cardpayers are in a different pool from major companies with a strong creditrating.

The marketplace operator sets the rules for transforming requested closetimes in offers into adjusted close times that match the available poolclose times in the marketplace. A marketplace operator may adjustrequested close times to the nearest available pool close time, to thepool close time immediately before or after the requested close time, orto any other available pool close time by any other rules. Themarketplace operator who chooses to organize pools by close time andother criteria, such as, for example, buyer, seller, product, or otherattributes, need not have all pools with differing criteria close at thesame times.

Pool close times may be varied to meet the business requirements of amarketplace. So, for example, pools targeting small business buyers orsellers may have more frequent close times than pools targeting largebusiness buyers or sellers of the same products.

FIG. 7 is a block diagram illustrating advantaged offer pricespecifications consistent with the present invention. Advantaged anddisadvantaged offers handle price specifications differently. In a basicadvantaged offer specification, for example, price specification 705,advantaged offers have a reserve price like reserve price 720. A reserveprice may be an all-in price, meaning the price includes all additionalcharges. In some marketplaces it may be desirable for the reserve priceto be based on a core product or core product plus options or some otherbasis that is not an all-in price. A reserve price is a constant andspecifies the least favorable price at which the advantaged offeror willtransact. A more complex advantaged offer price specification, such asspecification 710, may include a reserve price 730 which is similar toreserve price 720. Specification 710 also includes price-weightingfunction 740 and flag 750. If the price-weighting function 740 ispresent, then the disadvantaged price is adjusted as specified by theweighting function to determine the preference order in whichdisadvantaged offers will be locked. The price-weighting function onlyaffects the preference order for locking disadvantaged offers, whichoffers will lock at a price determined by the locking disadvantagedoffer's price function without any modification by the advantagedoffer's price-weighting function. The compare-weighted-price flag 750may be present when a weighting function has been specified. If present,the flag indicates whether to weight the disadvantaged offer's pricebefore comparing it with the advantaged offer's reserve price (ifunlocked) or lock price (if locked) to qualify the disadvantaged offeras lockable or not-lockable with the advantaged offer.

FIG. 8 is a block diagram illustrating a disadvantaged offer pricespecification consistent with the present invention. Disadvantaged offerprice specifications, like specification 810, have a pricing function820. The pricing function is used to calculate an offering price that isa function of the attributes of the opposite offer. Thus, a seller'sprice in a buyer-advantaged pool may be a function of the buyer'sdesired good or service, delivery location, time of delivery, insurance,warranty options, service contracts purchased at time of sale, productfeatures and options, means of payment, credit worthiness, and any otherattribute on which the seller chooses to base its offering price. Abuyer's price in a seller-advantaged pool may be a function of theseller's desired good or service, location, service quality rating,delivery terms, payment options, warranty, and any other attribute onwhich the buyer chooses to base its offering price.

An embodiment consistent with the invention could allow, for example,sellers in buyer-advantaged markets to post a sell offer whose productspecification allows for many different models of a product and to usethe sell offer pricing function to quote the correct price for thespecific model sought by a specific opposite buy offer.

An alternative embodiment may impose restrictions on price functions toassure that a disadvantaged offer price function always calculates thesame price for the same advantaged offer. Such a price function producesan “invariant price” for the same advantaged offer. Embodiments can takeadvantage of invariant-price functions to calculate price functions onceand save the result for later reference rather than repeating thecalculation every time a disadvantaged offer's price must be examined.An invariant-price function will, for example, produce prices that areindependent of the time, status of a pool, and status of any offer,including the status of the disadvantaged offer itself. With suchrestrictions, the only way a disadvantaged offeror can change itsoffering price to a specific opposite advantaged offer is to withdrawits previous disadvantaged offer, subject to any rules againstwithdrawing locked offers, and to submit a new disadvantaged offer witha different price function. Relaxing these restrictions and using pricefunctions that can produce different prices for the same advantagedoffer at different times may introduce greater motivation to posture,may reduce the accuracy of price-elasticity information, and may reducethe economic efficiency of the marketplace.

One restriction on an invariant-price function is that the pricefunction may have no persistent memory between invocations. A pricefunction with no persistent memory has, for example, no knowledge ofwhether it has ever been previously invoked, no knowledge of theattributes of any offers for which the function was previously invokedto calculate a price, and no knowledge of the results of any previousinvocation. Examples of other restrictions include an invariant pricefunction may not access a close time attribute of its pool or areal-time clock attribute or lock status attributes such as the reserveprice or lock price attribute of any other offer or the quantity lockedby the disadvantaged offer itself or any other offer.

As will be discussed later, invariant price functions do not precludequantity-driven, stepped-pricing schemes and all-or-nothing offers thatrequire locking on more than one opposite offer in order to lock on anyopposite offer. All-or-nothing offers may be implemented by usingmin-max quantity specifications in an embodiment that allows for minimumaggregate quantities across more than one opposite offer. Straddles ofmin-max quantity offers can be configured to achieve an arbitrarystepped-pricing schedule.

Furthermore, a marketplace operator may allow contingent offers that arecreated as a result of events that occur during the operation of themarketplace. For example, a marketplace event such as a lock on one unitor the occurrence of an external event such as a change in interestrates may automatically cause the posting of a new offer, the contingentoffer. A more specific example would be provided by a buyer in abuyer-advantaged market who locks a buy offer for one unit of a productand then automatically posts a sell offer for the same product at a $20higher price to the same or a different pool such as a seller-advantagedpool that closes at a later date. Note that posting a contingent offerdoes not conflict with invariant-price functions as the contingent offeris a newly posted offer and does not modify any existing, already-postedoffer.

Price functions may be implemented in any of several well-establishedways. Examples include lookup tables with rows, columns, and, ifrequired, additional dimensions that correspond to attribute values. Thetables could also have cells that correspond to price. Interpreted orcompiled computer program functions written in Java®, C++, and othercomputer programming languages could also be readily adapted for use inspecifying price functions. Another embodiment may utilize a graphicallanguage that allows users to manipulate graphic elements on a computerscreen to compose price functions. Other methods of defining pricefunctions are apparent and available to those skilled in the art.

FIG. 9 is a block diagram illustrating a pool consistent with thepresent invention. Marketplace systems consistent with the presentinvention can create a marketplace with multiple pools. Each pool iseither buyer-advantaged, in which prices tend to decline, orseller-advantaged, in which prices tend to rise. Pool 910 has a poolidentifier 920, which is used to reference the pool. A pool is furtherdefined by a pool close event such as event 930, which is any event, theoccurrence of which can be ascertained. Pool 910 is furthercharacterized by identifying whether it is buyer-advantaged orseller-advantaged, which may be identified using advantage flag 940.Additionally, pool 910 comprises a buy offer list 950 and a sell offerlist 960.

FIG. 10 is a block diagram illustrating alternative straddleembodiments. Straddles comprise a set of offers and a limit on the totalnumber of units or offers that may lock across the set of offers withina straddle. Straddle embodiment 1010 illustrates a straddle with asingle lock limit quantity 1030. Embodiment 1080 has minimum and maximumoffers or units represented by elements 1034 and 1038 and units oroffers tentatively locked 1070 (tentative locks are one means ofaccommodating locking and specification conflicts of the typeillustrated in FIG. 23 that can be created by locking offers withmin-max quantity specifications). The rest of the elements are the samethroughout the two illustrated alternative straddle embodiments.

Straddle embodiments may include a straddle ID 1015 for referencing thestraddle. They may also include flags 1020 such as (i) lock limit flag1022, which can be set if the lock limit has been reached; (ii) activeflag 1024, which can be set if the straddle is active; (iii) buy or sellflag 1026, which is set for buy offers and cleared for sell offers; and(iv) advantaged or disadvantaged flag 1028, which is set if the straddleis advantaged and cleared if the straddle is disadvantaged.

Straddles include an offer list 1040, which is a list of offers that arecurrently members of the straddle. Alternatively, straddles may includesome other mechanism selected by those skilled in the art to identifyand locate offers that are currently members of the straddle.

The exemplary straddles 1010 and 1080 also include a straddle membershipspecification 1050, which defines the rules for straddle membership andinclude a list of previously posted offers 1052 that are to be membersof the straddle upon posting the straddle, a list of concurrently postedoffers 1054 that are to be posted as part of posting the straddle, andrules for adding subsequently-posted offers 1056. The straddlemembership specification 1050 provides a means to incorporate past,present, and future offers into a straddle. Straddle embodiments mayalso include a number of units or offers locked 1065 and a number ofunits or offers available to lock 1065.

The offers in a straddle may span one or more pools. All of the poolsspanned by a single straddle must be similarly advantaged, that is allpools must be either seller-advantaged or buyer-advantaged. All offersin a single straddle must be either sell offers or buy offers. Thus astraddle must either be a buy straddle or a sell straddle, and either anadvantaged straddle or a disadvantaged straddle.

Offerors use straddles to specify tradeoffs, to buy or sell a limitedinventory across one or more pools, and to implement quantity-basedprice schedules. Advantaged straddles also motivate disadvantagedofferors to make aggressively-priced offers early in the offering periodof a pool.

Once the offers in a straddle lock their limit of offers or units, theremaining straddled offers or quantities within those offers are eitherpermanently withdrawn (advantaged straddles) or become ineligible foradditional locking until one or more of the straddle's locked units oroffers becomes unlocked (inactive disadvantaged straddles).

In the case of advantaged straddles, once an advantaged offer locks, itmay thereafter unlock, but only if it is to be immediately relocked on abetter-priced disadvantaged offer for the same product. Thus, once anadvantaged straddle locks its limit, the straddle's remaining unlockedoffers are precluded from locking and may be safely withdrawn andcancelled.

In the case of disadvantaged straddles, a locked offer within thestraddle may unlock from its opposite (advantaged) offer because abetter-priced disadvantaged offer became available to the advantagedoffer. When an unlocking reduces the number of locked units or offersbelow the lock limit of the disadvantaged straddle, all of thestraddle's offers may again become active until a locking occurs thatagain achieves the lock limit.

For example, an advantaged buyer may use a straddle to attempt to get agood deal on one of three appliances. The buyer submits a straddleconsisting of three buy offers. Each buy offer specifies a differentbrand and model and a reserve price that represents the value of thatbrand and model to the buyer. Only one of the straddled buy offers maylock. The first sell offer that meets one of the buyer's reserve priceswill lock one of the three buy offers. The other two buy offers will beautomatically withdrawn and cancelled. In this case, a side effect ofwithdrawing the offers to buy other brands is that the seller of thelocked brand is now assured that the buyer will buy its brand and not acompetitor's brand. The sellers competing to sell into this straddle aremotivated to offer prices low enough to meet the reserve price for thebrand they sell and to do so early, before their competitors.

Once a straddle locks on a product, alternative products are no longereligible for this buyer's business in this straddle because they arewithdrawn. Therefore, a straddle motivates disadvantaged offerors tooffer aggressive prices early in the offering period so that they lockbefore their competitors lock.

An offeror posts a straddle by specifying individual offers of thestraddle and their posting order. In an embodiment consistent with thepresent invention, offerors may specify straddles over already-postedoffers, provided the straddle lock limit would not be exceeded by thealready-locked units or offers of the already-posted offers. In anembodiment consistent with the present invention, an offeror may specifynew offers and an order of posting while specifying the straddle.Posting a straddle causes the new offers to be posted in the specifiedorder. In an embodiment consistent with the present invention, offerorsmay add offers to already-posted straddles, for example, offers that didnot exist when the straddle was originally posted. In an embodimentconsistent with the present invention, offerors may post a straddleincluding any combination of old, new, and future offers or straddles.In the case where one allows straddles of straddles, alternativeembodiments include posting an equivalent single straddle of offers withno embedded sub-straddles and providing mechanisms to continue tomaintain the identity of embedded straddles.

In the case of straddling already-posted offers, the chronologicalorder, or timestamp, of the already-posted offers is not changed. Anyadditional new offers posted with a straddle have their order specifiedby the straddle offeror before posting the straddle. Any offers postedafter the straddle has been posted and that are to be incorporatedwithin the straddle have their order determined by their time ofposting.

Posting a straddle that itself contains new offers is normally anon-interruptible posting operation. That is, in market-clearing enginesconsistent with the present invention, once the engine begins to postthe offers of a straddle, it will post all of the new offers in thestraddle before it posts any new offers that are not part of thestraddle.

When a pool closes, all of the unlocked offers in the pool are withdrawnand cancelled as part of the closing process. This action can affect astraddle that straddles a closing pool and one or more pools that remainopen. At pool close, a non-interruptible straddle clean-up process isperformed. No offers can be posted until the straddle clean-up processis completed.

For each offer withdrawn as a result of closing the pool, themarket-clearing engine determines whether it is a member of a straddle.If so, the market-clearing engine reduces the straddle lock limit of thestraddle of which the withdrawn offer is a member. The straddle locklimit is reduced by the number of locked units of the withdrawn offer,or by one offer if the withdrawn offer is locked and the straddle locklimit is specified as a number of offers rather than a number of units.

FIG. 11 is a block diagram illustrating a relationship consistent withthe present invention between exemplary offers, pools, and straddles.Each Pool 1130 consists of a close time, or close event, a buy offerlist 1120, and a sell offer list 1140. Buy straddles 1110 and sellstraddles 1150 limit the number of offers or the number of units thatcan lock across multiple offers that may be in multiple pools. Themarket-clearing engine manages straddles independently of any singlepool. Market-clearing mechanisms consistent with the present inventionplace no limits on offers in a pool other than the requirement that alloffers must share the same adjusted close time. However, businessconsiderations may lead marketplace operators to themselves imposeadditional limitations on pool membership.

The closing time of the pool is the closing time of the bidding period,and may be defined by the marketplace operator, by the offerors, or byany other mechanism acceptable to the marketplace operator to establisha closing time. Marketplace operators may adjust close times to fitpatterns (example, adjusted close times every half hour) or allow themto close at unadjusted times. Embodiments consistent with the presentinvention may only allow close times whose occurrence is known and fixedat the initialization of the pool. Other embodiments consistent with thepresent invention may accommodate close times that may not be known withcertainty during the bidding period but will be known with certaintyupon their occurrence. For example, in one embodiment, a close event maybe defined as the locking of a certain number of units in the pool, orthe passing of a specified amount of time with no new offers beingposted, or the announcement of a rate change by the Federal ReserveBoard. Close times can be set to correspond to the arrival of anyspecific event or combination of events.

FIG. 12 is a flow diagram illustrating a market-clearing mechanismconsistent with the present invention. A system interface of themarket-clearing mechanism accepts inputs from offerors and a marketplaceoperator (step 1210). Based on the input, the market-clearing mechanismgenerates straddles, offers, and withdrawals (step 1215). Once thestraddles, offers, and withdrawals are generated, a post event isgenerated (step 1225). Additionally, an external close event may occur(step 1220). At this point, the market-clearing mechanism enters anevent loop (step 1230). Next it is determined whether an offer event hasbeen generated (step 1235). If an offer event has been generated, theoffer is posted and locked as further described in FIG. 14 (step 1235).The event loop is completed and starts again.

If an offer event was not generated, it is determined whether a straddleevent was generated (step 1240). If a straddle event was generated, thenthe straddle is posted to the marked-clearing mechanism as furtherdescribed in FIG. 20 (step 1260). The event loop is completed and startsagain.

If a straddle event was not generated in step 1240, it is determinedwhether there was a withdrawal or close event (step 1245). If awithdrawal event was generated, then the withdrawal is posted to thesystem as further described in FIG. 21 (step 1265). Finally if a closeevent was generated, then the pool is closed as further described inFIG. 22 (step 1250) and the event loop starts from the beginning at step1230.

The primary functions performed by the market-clearing engine includeinitializing pools, posting offers to pools, sequencing offer lists,matching offers, locking and relocking offers, tracking the lock statusof straddled offers, and closing pools. The post and lock process withinthe Market-Clearing Engine is described in FIG. 14.

FIG. 13 is a block diagram illustrating a relationship consistent withthe present invention between offerors, system interfaces, andmarketplace operators. Buyers and sellers 1302 communicate withmarketplace interface 1304 that provides the functionality of an offergenerator, a straddle generator, a provider of pool information, productspecifications, market-data reports, and transaction reports.Marketplace interface 1304 and administrative interface 1310 interactwith each other through connection 1308. Marketplace Interface 1304communicates with market-clearing engine 1306, transmitting offers andstraddles as generated by the offer generator. Product taxonomy, poolcriteria, access authorization, and other data and control informationare exchanged as needed to enable the operation and enforce the rules ofthe marketplace. Finally, administrative interface 1310 is the interfaceused by marketplace operators 1312 to interact with the market system.One marketplace may have multiple operators, and that the operators ofmultiple marketplaces may collaborate so that they share some pools incommon to achieve larger pool sizes than any of the single collaboratingmarketplaces could achieve.

Market-clearing engines 1306, consistent with the present invention,exist within a marketplace system that determines pool criteria, enablesbuyers and sellers to define straddles, supplies the events that signalthe close of a pool, and provides the market-clearing engine with offersto post to pools and to then compare and lock with other offers in thesame pool. A market-clearing engine also manages related transactions,including withdrawals, straddles, and reporting.

FIG. 13A is a block diagram illustrating a system, consistent with thepresent invention, of accepting requests and generating offers,straddles, and withdrawals. The basic input to offer-generating systemscomprises requests 1314, which are made up of general parameters. Thesegeneral parameters may take the form of a list of products that anofferor is willing to buy or sell at particular prices and theconditions under which the offeror wishes to generate an offer. Requestsalso may be provided in free text, from a menu, or from other inputmechanisms selected by the marketplace operator. Requests 1314 areaccepted by offer generator 1316, which may include a productconfigurator 1318, capable of converting generalized product informationinto a standardized product specification (FIG. 4). Requests may bespecified as “fill or kill,” which will cause the offer generator togenerate an offer and withdrawal combination that will allow the postedoffer a brief time to lock or a single attempt to lock (one possiblyinterruptible pass against all opposite offers), and if it does notlock, it will be withdrawn. Another possible request generates anall-or-nothing offer, which as described in connection with FIG. 5,results in an offer with a min-max quantity specification where theminimum equals the maximum.

Another request generates a “fill and withdraw” offer, which is an offercombined with a withdrawal that allows an offer to lock as manycorresponding opposite units in a brief time or in one attempt, and oncethat is done, to withdraw any unlocked available quantity. Anotherrequest generates a “stepped quantity,” as will be discussed inconjunction with FIG. 13B.

Next, offer generator 1316 takes the standardized specifications andassociated prices from requests 1314 and generates either at least oneoffer such as offer 1320, or at least one withdrawal 1322, or at leastone straddle 1324, depending on the nature of the requests. Withdrawalsmay be posted alone without corresponding to fill-or-kill orfill-and-withdraw. Implementing fill-or-kill and fill-and-withdraw as aone pass single-shot uninterruptible attempt requires minor adjustmentsto the market-clearing engine, but it is obvious to one skilled in theart how to implement the minor modifications. The modifications involvethe addition of a one-pass offer flag in the offer specification. At theend of the compare and lock process for that offer, one does anuninterruptible immediate withdraw of any unlocked quantity.

FIG. 13B is a block diagram illustrating the relationship between aprice schedule and a corresponding set of advantaged offers posted inorder.

Market-clearing mechanisms consistent with the present invention mayalso include step pricing, as illustrated in price schedule 1330.Step-priced offers set prices based on aggregate quantity sold to manybuyers or purchased from many sellers. A buyer may submit an offer forone unit if the price is $10 and a total of three units if the price is$8 for all units. Similarly, a seller can offer one to five units at$10. If six to twenty units are purchased by all buyers, the price forall units is $8 each. The basic form of a stepped offer is illustratedin price schedule 1330. The total quantity to be transacted is: (i) 1 toi total units (cell 1331) at $A each (cell 1334); (ii) i+1 to j totalunits (cell 1332) at $B each (cell 1335); and (iii) j+1 to k total units(cell 1333) at $C each (1336).

In the case where prices are monotonically improving from step to step,an advantaged offeror's stepped-price schedule can be expressed as threeadvantaged offers posted in order, as illustrated by the offer set 1340.First, advantaged offer 1348 is posted with a reserve price of $A (cell1342), and a maximum quantity of i (cell 1350). Second, advantaged offer1352 is posted with a reserve price of $B (cell 1344) and a maximumquantity of (j−i) (cell 1354). Third, advantaged offer 1356 is postedwith a reserve price of $C (cell 1346) and a maximum quantity of (k−j)(cell 1358). The orders are posted in the order of increasing aggregatequantity and increasingly favorable price (to the advantaged offeror).This method works because any later offer cannot lock unless all earlieroffers, each of which has a less favorable reserve price, have locked.As all earlier offers achieve a lock price that equals or betters anylater offer, the offeror is assured that all prices of all locked unitsare at least as favorable at the latest locked offer.

One simple way of providing an approximation to a quantity-drivenstepped-price schedule for disadvantaged offers is to post a conditionaloffer when sufficient advantaged offers have been posted in a pool tojustify a higher-quantity price. One then posts a new offer at the morefavorable price and withdraws the earlier offer and straddles both theold and the new offers. This requires that the withdrawn offer be set todo-not-relock and that the new offer be placed in a straddle that allowslocks to the new offer when the new lock displaces a lock to the oldoffer. This method does not guarantee a faithful implementation of thestepped-price quantity schedule. For example, some advantaged offersthat were not locked to the withdrawn offer may be first in line to lockon the new offer, with the result that some locks remain with the oldoffer at the old price. Providing for more faithful implementation ofdisadvantaged offer stepped-price schedules requires a differentmechanism such as that discussed in relationship to FIG. 13C.

FIG. 13C is a block diagram illustrating the relationship between aprice schedule and a corresponding straddle of disadvantaged offers,each with a min-max quantity. The referenced price schedule is priceschedule 1330 of FIG. 13B. Pricing schedule 1330 may be represented by astraddle of disadvantaged offers 1380. The straddle contains one offerfor each price step (1382, 1383, and 1384) and the straddle lock limit1385 denotes the maximum aggregate number of units available. Themin-max quantity specification of each of the straddled offers denotesthe minimum and maximum number of units to which the pricing applies.

Stepped pricing schemes are traditionally monotonically increasing ordecreasing as one moves from price step to price step. Increasedquantity traditionally corresponds to more favorable prices for theadvantaged offeror. However, alternative embodiments of the subjectinvention can readily accommodate straddles of offers with overlappingprice-step quantities and prices that vary non-monotonically withaggregate quantity. Non-monotonically varying stepped-prices willtypically produce the most favorable net result for the advantagedofferors, but, certain inherent conflicts in locking offers with minimumquantity specifications may require that the marketplace designer oroperator compromise one desirable market trait in favor of another thatmay, for example, preclude one or more advantaged offerors fromachieving the most favorable result available. In general,monotonically-varying price schedules require fewer such compromises.

Locking methods that support offers with minimum quantity=1 can be usedto satisfy the following rules: First, any lock price will be compliantwith the terms of the disadvantaged offer. Second, once an advantagedoffer locks, the offeror is thereafter guaranteed a transaction at aprice equal to or better than the first lock price. Third, an advantagedoffer will achieve the best price available in the market, relative toits time of posting. Fourth, an advantaged offer will lock on a morefavorable disadvantaged offer before any later advantaged offer will beable to lock on that disadvantaged offer. Finally, once locked, anadvantaged offer can only relock at monotonically improving prices.

Supporting offers with minimum quantity>1 may create conflicts amongthese rules. That is, alternative embodiments that support min-maxquantity specifications may not be able to simultaneously satisfy all ofthe above rules, and it becomes an implementation choice for the marketoperator to determine where to compromise as shown in the discussion ofFIG. 23 below.

FIG. 14 is a flow diagram of a method consistent with the presentinvention for posting and locking offers. First, the market-clearingmechanism receives an offer (step 11405). Next, a pool definition iscreated based on the pool and product specifications contained withinthe received offer (step 1410). Next, it is determined whether such apool exists (step 1420). If not, a new pool is created (step 1430). Ifthe pool already existed, or after the new pool is created in step 1430,it is determined whether the offer is advantaged or disadvantaged (step1440).

If the offer is an advantaged offer, it is appended to the advantagedoffer list of the relevant pool (step 1450). Next, the offer is comparedwith the disadvantaged offer list and locked appropriately as furtherdescribed in FIG. 15. If, however, the offer is a disadvantaged offer,the offer is inserted into the disadvantaged offer list of the relevantpool (step 1470). Next the process of locking the new disadvantagedoffer list to the advantaged offer list is performed (step 1480) asfurther described in FIG. 17.

When a new offer is posted, the post and lock process is responsible forposting an offer to a pool and for locking the offer to any previouslyposted opposite offer. When later offers are posted, the process ofposting and locking those later offers may require that analready-posted offer be re-examined and possibly locked, unlocked, orrelocked.

For transactional efficiency, market-clearing engines consistent withthe present invention may take advantage of the fact that the advantagedand disadvantaged offer lists are primarily ordered by timestamp andprice respectively. Once posted, an advantaged offer need not be againcompared to all disadvantaged offers. It need only be compared todisadvantaged offers that are newly posted or newly unlocked and madeavailable for relocking.

Once posted, a disadvantaged offer need not be again compared to alladvantaged offers. However, when a disadvantaged offer is unlocked by abetter-priced disadvantaged offer, the unlocked disadvantaged offer iscompared to all advantaged offers posted after the advantaged offer fromwhich it unlocked. Doing so enables later advantaged offers to achieve afirst lock at their reserve price or better or to possibly achieve abetter lock price by relocking to the just-unlocked disadvantaged offer.If, in the process of locking to a later advantaged offer, aless-favorably-priced disadvantaged offer is unlocked, the processcontinues from the point of unlocking on the advantaged offer list untilall unlocked disadvantaged offers are relocked or the advantaged offerlist is exhausted.

The sequencing and locking process for newly-posted advantaged offers isdifferent from the sequencing and locking process for newly-posteddisadvantaged offers. When an advantaged offer is posted, themarket-clearing engine calculates the pricing function of eachdisadvantaged offer. The market-clearing engine uses the attributes ofthe posted advantaged offer as input to each disadvantaged offer'spricing function. The market-clearing engine then sequencesdisadvantaged offers using the prices calculated from their pricingfunctions. The most-favorable price for the posted advantaged offerappears first and the least-favorable price appears last on thesequenced disadvantaged offer list. Those disadvantaged offers with thesame price are sub-sequenced from earliest-posted (first) tolatest-posted (last). The market-clearing engine then proceeds along theordered disadvantaged offer list attempting to lock the postedadvantaged offer to each disadvantaged offer in sequence until theadvantaged offer is fully locked or the disadvantaged offer list isexhausted.

When a disadvantaged offer is posted, the market-clearing enginesequences the advantaged offer list from first posted to last posted.Note that the advantaged offer list can be created in this sequence.Thus a market-clearing mechanism can use the advantaged offer list toform properly-sequenced subsets of the advantaged offer list withoutperforming a separate sorting operation. A market-clearing engine mayexamine each advantaged offer in sequence. For each advantaged offer, itmay evaluate the disadvantaged-offer's pricing function using attributesof the advantaged offer. It then compares the two offers. If these twooffers match, meaning they have matching product, price, and quantity,then the market-clearing engine locks the two for the number of unitsavailable between them. If the posted disadvantaged offer is fullylocked, then the compare and lock process is finished. If the posteddisadvantaged offer is not fully locked, then the compare and lockprocess proceeds until the newly-posted disadvantaged offer is fullylocked or the advantaged offer list is exhausted.

FIG. 15 is a flow diagram for a method consistent with the presentinvention of generating a lock list for a selected advantaged offer. Instep 1510, the newly-posted advantaged offer is selected. Next, a listof disadvantaged offers that satisfy the product and quantityspecifications of the selected advantaged offer are created (step 1520).Fully-locked disadvantaged offers are removed from the list (step 1530).It is evident to one skilled in the art that previously lockeddisadvantaged offers could have been excluded at other points in theprocess. Next the price functions of the disadvantaged offers arecomputed based on the attributes specified in the selected advantagedoffer (step 1540).

Then, if price weighting is associated with the advantaged offer's pricespecification (step 1545), then the price weighting is applied to theraw price generated by the disadvantaged offer's pricing function toproduce a weighted disadvantaged offer price. Reserve and lock pricesare unweighted prices. Weighted prices are used to determine the orderin which disadvantaged offers are placed for comparing and locking.Weighted prices are not used for actual lock prices or transactionpayments. If desired by the advantaged offeror, weighted prices can alsobe used to test against the current reserve or lock price to determineif an advantaged offer is lockable to a disadvantaged offer. One use ofa weighting function is to allow the advantaged offeror to expresstradeoffs like: “It is worth $100 more to me if the seller hasfactory-trained service technicians.” A weighting function can adjustthe raw price generated by the disadvantaged offer pricing function totake into consideration the extra $100 value the buyer (in this example)perceives in factory-trained service technicians. Price weighting isused to sort disadvantaged offers even though final transactions willoccur at the lock price.

Next, disadvantaged offers with price functions that are lockable to thecurrent price of the selected advantaged offer are kept in the list ofdisadvantaged offers and the rest are discarded (step 1550). Note thatthis check for conformance uses weighted or unweighted prices dependingon the specification in the offer (using, for example, a compareweighted price indicator such as flag 750 in FIG. 7).

Next, a lock list is generated by sorting the remaining disadvantagedoffers by weighted price, if applicable, or unweighted price, andtimestamp (step 1560). Thus, the lock list is sorted first on price inthe order most favorable to the advantaged offer, and disadvantagedoffers with the same price are further ordered by timestamp, earliest tolatest. Finally, in step 1570, the selected advantaged offer is lockedto the most favorable disadvantaged offer, as further described in FIG.16.

FIG. 16 is a flow diagram of a method, consistent with the presentinvention, for locking an advantaged offer. The first step is to selectthe first disadvantaged offer in the lock list of ordered disadvantagedoffers (step 1605). Next, the available quantity of the selecteddisadvantaged offer is compared to the needed quantity of the advantagedoffer to determine whether the disadvantaged quantity specification isadequate to satisfy the quantity specification in the advantaged offerand the quantity specification of any straddle of which the advantagedoffer is a member (step 1610). This can be accomplished, for example, bydetermining whether t disadvantaged offer available quantity is greaterthan or equal to the advantaged offer available fragment quantityspecification. An available fragment may only be present if an unlockedquantity in an offer is available, as is the case in the example offerdata structure 322 of FIG. 3. In data structure 322, information aboutthe available quantity is contained in the quantity field of the firstfragment of fragment list 332.

If there is sufficient disadvantaged offer quantity, the advantagedoffer fragment is accessed (step 1637). Note that this will be the lastdisadvantaged offer needed to fully lock the advantaged offer. Next, theremaining unlocked advantaged offer quantity (after considering straddleconstraints) is locked at the price computed using the disadvantagedoffer price function (step 1640). Next, the attributes including thequantity specification are updated in both offers to reflect the newlock (step 1645). This reduces the offered quantities in the quantityspecification by the newly locked quantity. Additionally, any straddlesare updated in which either offer is a member (step 1650). Updating astraddle, a member offer of which has just locked, may involvewithdrawing all of the rest of the offers in a straddle or adjusting thenumber of units or offers available to lock in the straddle.

Referring back to step 1610, if the available quantity corresponding tothe disadvantaged offer is not sufficient to fulfill the quantityrequested in the advantaged offer, then the next fragment in theadvantaged offer is created (step 1613). In step 1615, the quantity ofthe disadvantaged offer is locked at the disadvantaged offer price. Theavailable quantity is the lesser of the available quantity in thedisadvantaged offer and the available quantity in any straddle of whichthe offer is a member. Next, the specifications are updated for bothoffers to reflect the newly locked quantity (step 1620). Any straddlesto which either offer belongs are updated appropriately based on thequantity locked (step 1625). Since the advantaged offer has unfulfilledrequested quantities, it is determined whether there are additionaldisadvantaged offers in the lock list (step 1630). If so, the nextdisadvantaged offer is selected (step 1635), and the process continues.If not, the advantaged offer locking process is complete.

FIG. 17 is a flow diagram of a method 1700 consistent with the presentinvention of comparing and locking a disadvantaged offer. It is assumedthat before performing the method, the next advantaged offer is set tothe first advantaged offer in the list of advantaged offers. The firststep is to select the next advantaged offer (step 1702). In step 1705,the method determines whether the disadvantaged offer productspecification is compatible with the advantaged offer productspecification.

If the product specifications do not match, it is determined whetherthere are more advantaged offers in the pool (step 1710). If moreadvantaged offers are in the pool, process 1700 is recursively performed(step 1715). If there are no more advantaged offers in the pool, thenthe process completes.

If the product specifications do match (step 1705), then thedisadvantaged price function is calculated using the attributes of theadvantaged offer (step 1720). Next it is determined whether thedisadvantaged price is lockable to the advantaged offer (step 1725). Aprice is lockable if the disadvantaged offer price, whether weighted orunweighted, depending on the setting of a flag such as flag 750 in FIG.7, is (i) within the advantaged offer reserve price if the fragment isunlocked or (ii) less than the fragment's current lock price if locked.

If the price is not lockable, it cannot lock and the process continuesfor the next advantaged offer on the list. On the other hand, if thedisadvantaged price is lockable, the method will proceed to step 1730.The advantaged offer quantity, which is the sum of all lockablefragments, and the disadvantaged quantity are calculated considering theconstraints of any straddles of which the disadvantaged offer or theadvantaged offer are members. Step 1730 determines whether theadvantaged offer quantity specification is sufficient to exhaust theavailable quantity associated with the disadvantaged offer. For both theadvantaged offer and the disadvantaged offer, available quantity refersto the lesser of the quantity remaining in the offer specification andthe current straddle limit of any straddle of which the offer is amember.

If the advantaged offer quantity is sufficient to exhaust thedisadvantaged offer quantity, the process of locking a disadvantagedoffer is performed (step 1735) and quantity to lock is the quantityavailable in the disadvantaged offer. The process in step 1735 isfurther explained in conjunction with FIG. 18. While performing theprocess (step 1735), the market-clearing engine may unlock disadvantagedoffers with less favorable prices. Note that the subject disadvantagedoffer may offer enough quantity at a sufficiently favorable price tounlock more than one fragment. As each fragment may represent adifferent disadvantaged offer, more than one offer may be unlocked.Unlocked disadvantaged offers are placed on a relock list.

In the next step it is determined whether the relock list is empty (step1755). If the relock list is empty, the process terminated, otherwise,as further described in FIG. 19, the market-clearing engine attempts torelock the disadvantaged offers on the relock list (step 1745).

If the advantaged offer quantity is not sufficient to exhaust thequantity available in the disadvantaged offer (step 1730), the processof locking a disadvantaged offer is performed and the quantity to lockis the quantity available in the advantaged offer (step 1750). Thisprocess is further explained in conjunction with FIG. 18. Next it isdetermined whether the relock list is empty (step 1755). If it is empty,the process proceeds to step 1710. Otherwise, the disadvantaged offer isre-locked as further described in FIG. 19 (step 1760). Finally, method1700 is recursively performed (step 1715) until the process terminates.

FIG. 18 is a flow diagram for a method of locking a disadvantaged offer.First, necessary parameters are accepted (step 1802). Next, the relocklist is initialized (step 1804). Next, the available quantity in thedisadvantaged offer fragment is updated as further described inconjunction with FIG. 18B (step 1806). Next, a new disadvantaged offerfragment is created (step 1808), and a new advantaged offer fragment iscreated (step 1810). Next, the new advantaged offer fragment is appendedto the advantaged offer fragment list (step 1812). Next, the advantagedoffer available quantity is reduced by an amount equal to the quantityto lock (step 1814). Next, if the advantaged offer available quantity iszero, then disadvantaged offer has locked exactly the quantity ofavailable units in the advantaged offer, no disadvantaged offers areunlocked and the empty available fragment may be deleted. The advantagedoffer available fragment is deleted (step 1816), and where theadvantaged offer fragment list is placed in standard sort order (step1843), and the process then terminates.

If the advantaged offer available quantity is positive (step 1816), thenthe advantaged offer will still have available quantity after locking tothe disadvantaged offer, no disadvantaged offers will be unlocked, andthe advantaged offer fragment list is placed in standard sort order(step 1843), and the process then terminates.

If the advantaged offer available quantity is negative (step 1816), thenthe disadvantaged offer will fully lock the available quantity of theadvantaged offer, will lock to other previously locked fragments of thedisadvantaged offer, and will unlock those previously locked offersassociated with the fragments to which the disadvantaged offer locks.The process proceeds by setting the quantity remaining to unlock to theadditive inverse of the advantaged offer available quantity (step 1818).Next the advantaged offer available fragment is deleted (step 1820), asthere is no longer available unlocked quantity in the advantaged offer.Next, the current fragment is set to the first advantaged offer fragment(step 1822). In this example, the offer fragment list is maintained instandard sort order, from worst lock-price to best lock-price. Next, thedisadvantaged offer associated with the current fragment is unlocked asfurther described in conjunction with FIG. 18A (step 1824). Next, thequantity remaining to unlock is decremented by the quantity unlocked inthe previous step (step 1826). Next, the unlocked disadvantaged offer isappended to the relock list (step 1828) provided that it is relockable.Next, it is determined whether the quantity remaining to unlock is zero.If not, the current fragment is set to the next fragment on the fragmentlist (step 1832). If the quantity remaining to unlock is zero then theadvantaged offer list is placed in standard sort order (step 1834) andthe process terminates.

FIG. 18A is a flow diagram for a method consistent with the presentinvention of unlocking a disadvantaged offer. The fragment to beunlocked is located within the disadvantaged offer (step 1852). Next thefragment quantity is decremented by the quantity being unlocked (step1854). If the resulting fragment quantity is zero (step 1856), thefragment is deleted (step 1857). If the fragment lock status isrelockable (step 1858), then it is determined whether the first fragmentis unlocked (step 1859). If it is, then the first fragment availablequantity is incremented by unlock quantity (step 1861). Next, thedisadvantaged offer attributes and straddle attributes are updated,including status, quantities, and flags (step 1862).

If the fragment is not relockable (step 1858), then execution resumes atstep 1862. If the first fragment is not unlocked (step 1859), then a newunlocked first fragment is created with quantity equal to the unlockquantity (step 1860). Finally, the disadvantaged offer status and otherattribute are updated (step 1862), and the process is complete.

FIG. 18B is a flow diagram for a method consistent with the presentinvention of updating the available quantity in a disadvantaged offerfragment. If the disadvantaged offer fragment available quantity isequal to the quantity to lock (step 1874), the fragment is deleted (step1876). Otherwise, the fragment available quantity is reduced by thequantity to lock (step 1878).

FIG. 19 is a flow diagram for a method consistent with the presentinvention of relocking a disadvantaged offer. First, parameters areaccepted including a pool identifier, the next advantaged offer on theadvantaged offer list of the identified pool, and a relock list (step1902). Next, the current disadvantaged offer is set to the firstdisadvantaged offer on the relock list (step 1904). Next, the methodcompares and locks the disadvantaged offer as further described inconjunction with FIG. 17 (step 1906). If the current disadvantaged offeris not the last on the relock list (step 1910), then the currentdisadvantaged offer is set to the next disadvantaged offer in the relocklist (step 1908), and the process continues at step 1906. If the currentdisadvantaged offer is the last one on the relock list (step 1910), thenthe process is complete.

FIG. 20 is a flow diagram for a method of posting a straddle consistentwith the present invention. Straddle parameters are accepted (step2002). Next, the straddle data structure is initialized, includingadding a list of previously-posted offers to the straddle offer list(step 2004). If the new offers list is empty (step 2006), then asubsequent offer monitor is configured to add future offers to thestraddle (step 2018), and the process is complete. One example of asubsequent offer monitor can be an offeror who could simply direct themarketplace interface to add an offer to an existing straddle.

If the new offers list is not empty (step 2006), then the current offeris set to the first offer on the new offer list (step 2008). Next, thecurrent offer is added to the straddle offer list (step 2010). Thestraddle offer list contains the list of all offers that are currentlymembers of the straddle. Hence the posting of a straddle requires thattwo categories of offers be place on the straddle offer list: (i) allstraddled offers that have already been posted prior to the posting ofthe straddle and (ii) all new offers on the new offer list (those offersto be posted concurrently with the posting of the straddle). Futureoffers that are to be members of the straddle and that are posted afterthe straddle itself has been posted will also be added to the straddleoffer list when they are posted.

Next, the method posts and locks the current offer, as further describedin conjunction with FIG. 14 (step 2012). If the current offer is not thelast new offer on the new offer list (step 2016), then set the currentoffer to the next offer on the new offer list (step 2014). Otherwise,the method continues at step 2018.

FIG. 21 is a flow diagram for a method consistent with the presentinvention of posting a withdrawal. To post a withdrawal in amarket-clearing system consistent with the present invention, the firststep is to determine in which pool the offer is posted (step 2110).Next, the quantity of the withdrawn offer is reduced to the quantitythat is currently locked (step 2120). If the resulting quantity is zero(step 2130), then the offer is deleted from the offer list (step 2140).If not (step 2130), then in it is determined whether the offer is anadvantaged offer or a disadvantaged offer (step 2150). If the withdrawnadvantaged offer has a non-zero locked quantity, then the advantagedoffer cannot be fully withdrawn and the process ends. If the offer is adisadvantaged offer then it must be determined whether the offer has theno-relock attribute (step 2160). If the offer does not have theno-relock attribute, then it may relock. Otherwise, the do not relockflag is in the set state, and the lock status is placed into the setstate (step 2170).

Whereas unlocked offers can be withdrawn at any time, locked offerscannot be withdrawn as long as the offer is locked. An offeror canmodify an offer at any time to reduce the offered quantity to thequantity currently locked. An offeror may not otherwise modify a postedoffer.

FIG. 22 is a flow diagram for a method consistent with the presentinvention of closing a pool. The first step is to select the firstlocked fragment corresponding to the first locked pair of offers in thepool (step 2210). Next a transaction directive is generated based on thelocked fragment (step 2220). A transaction directive is simply some kindof a report or output to the transacting parties confirming theirobligation to complete the transaction. If there are more fragments(step 2230), then the next locked fragment is selected (step 2240) andthe process continues at step 2220. If not (step 2230), then straddleparameters are adjusted to reflect the offers that were removed due tothe closing of the pool (step 2250). Since there may be straddles thatcontain offers in other pools, the closing of one pool does notnecessarily imply the closing of all straddles that reference that pool.Straddles are updated by removing offers in the closing pool, adjustinglock limits by locked quantities in the closing pool, and adjustingother relevant straddle status items.

At the close of a pool, locked offers result in transactions. Unlockedoffers do not produce a transaction. For example, consider a buyer whospecifies a $10,000 reserve price for a welding machine in abuyer-advantaged market. If the lowest offered selling price at close is$10,800, the buy offer with its $10,000 reserve price will never lock,no transaction directive involving this buy offer will be generated, andthe buyer will not make a purchase in this pool.

Referring back to FIG. 1, as part of the pool closing process,market-clearing engine 185 causes transaction directives 176 to betransmitted to the transaction database 181. These transactiondirectives are then compiled into transaction reports 170 and 172 thatare delivered to transacting buyers and sellers to facilitate completionof the transactions. One embodiment produces transaction directives thatcause transactions between each locked pair of offers. Other embodimentsmay not map fragments directly to transaction directives between the twoofferors of each fragment. For example, buyers A and B may havespecified identical offers resulting in A locking to seller X and Blocking to seller Y and all parties doing so at the same final lockprice. A transaction directive that maps directly to locked fragments atthe close of this pool will result in a directive for A and X totransact and for B and Y to transact. A transaction alternativeconsistent with the invention could direct A and Y to transact and B andX to transact. The specific transactions may use other than a one-to-onemapping between fragments and transactions provided that the offerspecifications and lock price produce a comparable match for theultimately transacting parties.

FIG. 23 is a block diagram illustrating a potential conflict inherent inthe use of min-max-quantity offers. The representative pool isbuyer-advantaged. Disadvantaged sell offer 2310 is posted first with amin-max-quantity specification that requires that at least two units areable to lock before any units may be locked. Advantaged buy offer 2320is posted second, but no lock occurs as offer 2320 alone cannot meet themin-max-quantity specification of sell offer 2310. Advantaged buy offer2330 is posted third. Offers 2320 and 2330 together satisfy themin-max-quantity specification of offer 2310 and both lock to offer2310. Disadvantaged sell offer 2340 is posted fourth and offers one unitat a better price than offer 2320. The marketplace designer or operatornow must make a choice of how to handle this situation. There areseveral possible approaches. The first approach involves unlocking offer2310 from offer 2320 and relocking offer 2320 to offer 2340, leavingoffer 2330 locked to 2310, which corresponds to the approach shown inFIG. 23, status after 4th posting. The problem is that sell offer 2330is then locked at a price that was only intended to be offered for thesale of two or more units. If offer 2330 remains locked when the poolcloses, then the quantity specification of offer 2310 is violated.

The second approach is to unlock offer 2320 from offer 2310, relockoffer 2320 to offer 2340, and unlock offer 2330 from offer 2310. Butthat would mean that locked advantaged offers may subsequently unlockand not transact during this pool, thus providing no assurance that oncelocked an advantaged offer will always be locked and ultimately resultin a transaction.

The third approach is to continue to lock offer 2320 to offer 2310 topreserve the quantity price of offer 2330. Offer 2320 will only unlockif offer 2330 also unlocks and both can be relocked at prices no lessfavorable than the quantity lock price they each enjoyed with offer2310. But that would mean that offer 2320 could not take advantage ofbetter offers because of the presence of offer 2330, thus denying offer2320 the opportunity to lock at the best price available to it in themarketplace.

The fourth approach is to introduce tentative locks. If a disadvantagedoffer's minimum quantity exceeds one, it can only tentatively lock to anadvantaged offer. Tentative locks can unlock if the right combination ofdisadvantaged offers is posted. Disadvantaged offers with minimumquantities equal to one can have both firm and tentative locks. At theclose of the pool, the most favorably priced (to the advantagedofferor), tentative locks produce transactions at the tentative lockprice and the pool close process updates straddles accordingly. Buttentative locking means that advantaged offers may have uncertaininterim prices that subsequent disadvantaged offers may cause to berescinded prior to closing a pool. Thus lock prices may varynon-monotonically from tentative lock to tentative lock rather thanvarying monotonically.

Different embodiments consistent with the present invention that followthe fourth approach may choose to allow or disallow tentatively-lockedoffers to be withdrawn. Also, in certain circumstances, an offer with aminimum quantity equal to one may be firmly locked on one opposite offerand tentatively locked on another. Finally, when both advantaged anddisadvantaged offerors use monotonically-varying quantity-driven priceschedules, minimum quantity specifications are needed only fordisadvantaged offers. In this situation, one can simulate tentativelocks in a straightforward, but computationally inefficient manner. Theresults of a tentative locking protocol will be the same, at any stageof offering, as if all locks are removed, then all disadvantaged offersare posted in their original order (producing no locks as there are notyet any opposite offers to which they can lock), then all advantagedoffers are posted and locked in their original order. Repeating thisprocess at each posting of an advantaged or disadvantaged offer willproduce a series of lock prices for any individual offer that would bethe same as if one introduced tentative locks. Tentative locks keeptrack of sufficient marketplace state to more efficiently (in terms ofcomputation) determine and produce the sequence of lock prices byincrementally adjusting the state of the marketplace rather than byreinitializing the pool and then reposting all disadvantaged offersfollowed by all advantaged offers. Locking offers with minimum quantityspecifications requires augmentation of the exemplary methods describedearlier for posting, comparing, and locking offers (FIG. 14 and later).

FIG. 24 is a block diagram illustrating an alternative embodiment of anoffer including a minimum and maximum quantity specification. The offerdata structure 2410 illustrates an exemplary offer data structure thatcontains information for tracking lock status and progress towardsachieving minimum quantities. Data structure 2410 varies somewhat fromdata structure 322 in FIG. 3, in that various identifiers are grouped ina data sub-structure 2420, which represents identifiers.Quantity-related information is grouped in a data substructure 2440 andincludes a minimum-quantity specification 2442 and a maximum-quantityspecification 2444. The available-to-lock-field 2446 is kept constantlyupdated as to how many units of the maximum allowed in this offer remainunlocked (including straddle-imposed limitations). The currently-lockedfield 2448 is kept constantly updated as to how many units of this offerare presently locked.

In the fragment list 2450, offer or fragment ID's 2452 may be used topoint to a specific offer or to a specific fragment within an offer. Analternative embodiment uses a direct pointer to a fragment. Others mayuse a direct pointer to an offer and then search for the desiredfragment within that offer. Lock status 2454 has at least four states.The first is unlocked. The second is locked, meaning if subsequentlyunlocked, then attempt to relock on another offer. The third isdo-not-relock, meaning locked but do not attempt a relock if unlocked.The fourth is potential-lock, meaning unlocked but could lock if aminimum quantity is achieved.

A lock price 2456 is a reserve price if the lock status is “unlocked”and a lock price otherwise. Fragment quantity 2458 specifies the numberof units of the offer represented by this fragment.

In the discussion of the following alternative embodiments, the fragmentlist of advantaged offers is kept sorted from worst price first to bestprice, although in other embodiments, the fragment list may be sorteddifferently or sorted only whenever there is a need to process thefragment list.

Exemplary Min-Max-Quantity Embodiment

Corresponding to each locked, do-not-relock, and potential-lock fragmentis an opposite offer fragment with the same quantity. In order toimplement minimum-quantity locking, one must first provide a method forrecognizing when a minimum quantity constraint can be met by combiningthe quantities of more than one other opposite offer. Once one canrecognize that a minimum quantity is available, then any of a variety ofmethods can be used to implement a locking policy for dealing with theproblem of a later and more-favorably-priced disadvantaged offer lockingsome units and in the process unlocking enough units from aless-favorably-priced disadvantaged offer to fall below theless-favorably-priced disadvantaged offer's minimum quantityspecification while still leaving some units locked at the quantityprice, thus violating the pricing specification. Approaches one throughfour discussed above are examples of locking policies that could beapplied when this problem arises.

Mechanisms consistent with the present invention and sufficient torecognize minimum-quantity locking opportunities keep track of potentiallocks (become real locks when a minimum aggregate quantity is achieved)and provide definitive notice when a locking opportunity is present. Onemeans of doing so is to maintain, for each offer, information aboutpotential locks on opposite offers.

For each advantaged offer, a list of every disadvantaged offer thatwould match the specifications of the advantaged offer if a minimumquantity were to be achieved is maintained. Each such offer has apotential lock. It is not necessary to track disadvantaged offers thatcould not lock because they have prices worse than those alreadyavailable to the advantaged offer. Every time an advantaged offerrelocks on a better price or has an initial lock, all potential locksare updated so that their information is current. Thus one removespotential locks with lock prices that are no longer competitive, and oneupdates quantities available to lock that are associated with eachremaining potential lock by accounting for the number of units justlocked and their lock price.

When a lock supersedes a potential lock and causes the potential lock tobe partially or wholly removed from the present advantaged offer's listof potential locks, the superseded potential lock can then be madeavailable to later-posted advantaged offers to determine the opportunityof a superseded disadvantaged offer to now potentially lock with thoselater advantaged offers. One way to implement the passing of thesuperseded potential lock disadvantaged offer to later-posted advantagedoffers is to use a process for potential locks similar to the relockprocess shown in FIG. 19.

Similarly to the advantaged offer case, for each disadvantaged offer,one maintains corresponding lists of potentially lockable advantagedoffers. Thus as lock status changes, one can immediately find everyrelevant disadvantaged and advantaged offer that has the potential to beeffected by the change in lock status, adjust the fragments of each suchoffer to recognize the new status, update potentially availablequantities, and pass opportunities to other offers that are created whenone offer supersedes another.

Data structure 2410 in FIG. 24 is an example of a data structure that iscapable of maintaining such lists. Within data structure 2410, the listof relevant opposite offers is maintained within the fragment list.Summing the appropriate fragments provides an up-to-date account of howclose the offer is to achieving its own minimum quantity or the minimumquantity of an opposite offer. Thus when one offer is compared withanother offer, a market-clearing engine can immediately determine if thetwo together will meet or exceed a minimum quantity that renders themlockable. If so, they are locked with an appropriate lock status. Ifnot, each offer's data structure is updated to recognize the additionaladvance towards achieving a minimum quantity that the opposite offercreates. These checks can occur at every examination of an offer as wellas at every change of status of an offer that is represented on afragment list. A change in one offer can ripple through the lists ofoffers causing some offers to no longer be available for locking andothers to become available for locking.

For example, consider a new offer that fails to meet minimum quantityrequirements for a lock. The tracking of minimum-quantity status isfacilitated by adding a fragment to the fragment list with status“potential-lock,” and placing the fragment in the fragment list in theorder of its price. A new potential-lock fragment does not change theavailable-to-lock or currently-locked fields of the offer's datastructure. These fields can only be changed by the occurrence of a lockor unlock event.

FIG. 25 is a flow diagram of an alternative embodiment of a method oflocking an advantaged offer consistent with the present invention. Inorder to implement minimum quantity offers, the method must consider thenew potential-lock status and check the data fields that containinformation needed to determine whether or not the advantaged offer isfully locked and whether or not the lock list has been exhausted.Process 2500 is a minimum-quantity-capable variation of step 1570 inprocess 1500 to lock an advantaged offer.

First, the first disadvantaged offer in the lock list is selected (step2510). Next, the advantaged offer is locked to the disadvantaged offeras further described in conjunction with FIG. 26 (step 2520). If theadvantaged offer is fully locked or the lock list is exhausted (step2540), then the process is complete. Otherwise, the next disadvantagedoffer in the lock list is selected (step 2530), and the processcontinues at step 2520.

FIG. 26 is a flow diagram of a method consistent with the presentinvention of locking an advantaged offer to a disadvantaged offer,including the use of potential locks. If the disadvantaged offer has aminimum quantity of 1 or has a minimum quantity that is alreadysatisfied (step 2610), the advantaged offer is locked to thedisadvantaged offer as further described in connection with FIG. 27(step 2630).

If the disadvantaged quantity is greater than one and the minimumquantity is not already met (step 2610), then it is determined whetherthe sum of all potential locks in the fragment list of the disadvantagedoffer plus the quantity of the advantaged offer are less than theminimum quantity specification (step 2620). If so, then the advantagedoffer is added to the disadvantaged offer's list of potential locks asfurther described in conjunction with FIG. 28 (step 2640). If not, thenthe advantaged offer is locked and all potential lock fragments areconverted to locked fragments as further described in conjunction withFIG. 29.

FIG. 27 is a flow diagram of a method consistent with the presentinvention of locking an advantaged offer to a disadvantaged offer. Thesystem creates a disadvantaged offer fragment or an advantaged offerfragment if necessary (step 2710). Next, disadvantaged offer andadvantaged offer fragments are locked for the largest quantity that bothcan currently meet, and appropriate lock status, opposite offer ID, andquantity are set (step 2720). Next, any straddles containing theadvantaged offer or the disadvantaged offer are updated by settingavailable quantity, locked quantity, and the active/inactive flag (step2730).

FIG. 28 is a flow diagram of a method consistent with the presentinvention of adding an advantaged offer to the list of potential locksassociated with a disadvantaged offer. Fragments are created if needed(step 2810). Next, corresponding fragments are flagged as potentiallylocked in the corresponding advantaged offers and disadvantaged offersfor the largest quantity that both can meet at this time (step 2820).Next, any straddles of which the advantaged offer or the disadvantagedoffer are members are updated, including setting the available quantity,locked quantity, and active/inactive flag, (step 2830).

FIG. 29 is a flow diagram of a method consistent with the presentinvention of locking an advantaged offer and converting allpotential-lock fragments to locked fragments. First the method convertsall of the disadvantaged offer potential-lock fragments to lockedfragments and updates the status of all linked offers with fragments inthe advantaged offer and disadvantaged offer fragment lists, placingdisadvantaged offers unlocked in the process on the relock list ifappropriate, adjusting lock status, and available quantities (step2910). Next, the method creates a fragment, if needed, and locks thedisadvantaged offer and advantaged offer fragments for the largestquantity that both can meet at this time, setting the appropriate lockstatus, opposite offer ID, and quantity (step 2920). Next, the methodcreates a relock list of any locks that cause a disadvantaged offer tobe unlocked (step 2930). Next the method relocks all relockabledisadvantaged offers on the relock list (step 2940). Finally, the methodupdates any straddles of which the advantaged offer or disadvantagedoffer are members, setting the available quantity, locked quantity, andactive/inactive flag (step 2950).

It will be apparent to those skilled in the art that variousmodifications and variations can be made in the market-clearing systemand methods consistent with the principles of the present inventionwithout departing from the scope or spirit of the invention. Althoughseveral embodiments have been described above, other variations arepossible consistent with the principles of the present invention.

The term “computer-readable medium” as used herein refers to any mediumthat may store instructions for execution. Such a medium may take manyforms, including but not limited to, non-volatile memory media, volatilememory media, and transmission media. Non-volatile memory mediaincludes, for example, optical or magnetic disks. Volatile memory mediaincludes RAM. Transmission media includes, for example, coaxial cables,copper wire and fiber optics, including the wires. Transmission mediacan also take the form of acoustic or light waves, such as thosegenerated during radio wave and infrared data communications.

Common forms of computer-readable media include, for example, a floppydisk, a flexible disk, hard disk, magnetic tape, or any other magneticstorage medium, a CD-ROM, DVD, any other optical medium, a RAM, a PROM,an EPROM, a FLASH-EPROM, any other memory chip or cartridge, a carrierwave as described below, or any other medium from which a computer canread and use.

Various forms of computer-readable media may be involved in carrying oneor more sequences of instructions for execution to implement all or partof the cyclic cache described herein. For example, the instructions mayinitially be carried on a magnetic disk or a remote computer. The remotecomputer can load the instructions into its dynamic memory and send theinstructions over a telephone line using a modem. A modem local to acomputer system can receive the data on the telephone line and use aninfrared transmitter to convert the data to an infrared signal. Aninfrared detector coupled to appropriate circuitry can receive the datacarried in the infrared signal and place the data on a bus. The bus maycarry data to a memory, from which a processor retrieves and executesthe instructions. The instructions received by the memory may optionallybe stored on a storage device either before or after execution by theprocessor.

Other embodiments of the invention will be apparent to those skilled inthe art from consideration of the specification and practice of thedisclosed embodiments. The specification and examples are exemplaryonly, and the true scope and spirit of the invention is defined by thefollowing claims and their equivalents.

1. A system for clearing binding offers, each of which specifiesconditions for acceptance, the system comprising: a processing unit; aninput/output device coupled to the processing unit; a storage device incommunication with the processing unit, the storage device including,program code for receiving a plurality of binding advantaged offers eachhaving a respective requested close time, wherein an advantaged offer isone which, once associated with a given disadvantaged offer, willnecessarily be transacted upon, either in accordance with termsoriginally associated with the advantaged offer, or in accordance withbetter terms; program code for associating individual binding advantagedoffers with individual available most-favorable binding disadvantagedoffers each having a respective close time, wherein the conditions ofacceptance of the individual binding advantaged offers are met byrespective binding disadvantaged offers; program code for changing theassociation of one of the individual binding associated advantagedoffers to a newly available binding disadvantaged offer that offers morefavorable terms than a currently associated binding disadvantaged offer,when the newly available binding disadvantaged offer is received andmeets the conditions of acceptance of the associated binding advantagedoffer, wherein the step of changing the association is performed inorder of chronological priority of receipt of the binding advantagedoffers; program code for, at a time based on respective requested closetimes of associated individual binding advantaged offers and bindingdisadvantaged offers, clearing the associated individual bindingadvantaged offers and binding disadvantaged offers to produce clearedindividual binding advantaged offers and binding disadvantaged offers;and program code for transmitting transaction directives to transactingbuyers and sellers associated respectively with the cleared individualbinding advantaged offers and binding disadvantaged offers.
 2. A systemas in claim 1, wherein the binding advantaged and binding disadvantagedoffers are each associated with a pool and a corresponding pool closetime.
 3. A system as in claim 1, wherein the specified conditions foracceptance of the offers have attributes related to terms of acceptanceof that offer, and wherein the program code for associating furthercomprises: program code for applying attributes of one of the bindingadvantaged offers to a price function for one of the bindingdisadvantaged offers to systematically calculate a price.
 4. A system asin claim 3, wherein the calculated price includes all appropriate costs.5. A system as in claim 3, wherein the program code for associatingcomprises: program code for applying attributes of one of the bindingdisadvantaged offers to a weighting function for one of the bindingadvantaged offers to systematically calculate a weighted price.
 6. Asystem as in claim 3, wherein the program code for applying attributesof one of the binding advantaged offers comprises: program code forusing as the price function a table that has one or more attributedimensions whose table entries include price elements and a definedmethod for combining the relevant price elements to determine a pricethat corresponds to specific attributes of a specific binding advantagedoffer.
 7. A system as in claim 3, wherein the program code for applyingattributes of one of the binding advantaged offers comprises: programcode for using as the price function a computer program capable ofdefining a price based on attributes of the binding advantaged offer. 8.A system as in claim 1, wherein the conditions of acceptance of theoffers include price specifications, and wherein the program code forassociating further comprises: program code for comparing pricespecifications.
 9. A system as in claim 8, wherein the pricespecifications are constant prices, and wherein the program code forcomparing the price specifications comprises: program code for comparingconstant prices.
 10. A system as in claim 1, wherein the program codefor associating further comprises: program code for considering onlybinding disadvantaged offers that are not already associated with otheroffers.
 11. A system as in claim 1, wherein the conditions of acceptanceof the binding advantaged offers further comprise: a productspecification, a quantity specification, a pool specification, and afragment list; and wherein the program code for associating includes:program code for examining the product specification, quantityspecification, pool specification, and fragment list of the bindingadvantaged offers.
 12. A system as in claim 11, wherein the quantityspecification further comprises a minimum quantity and a maximumquantity; and wherein the program code for changing the associationincludes: program code for examining the minimum and maximum quantities.13. A system as in claim 1, wherein the conditions of acceptance of thebinding disadvantaged offers further comprise: a product specification,a quantity specification, a pool specification; and a fragment list; andwherein the program code for changing the association includes: programcode for examining the product specification, quantity specification,pool specification, and fragment list of the binding disadvantagedoffers.
 14. A system as in claim 13, wherein the quantity specificationfurther comprises: a minimum quantity and a maximum quantity; andwherein the program code for changing the association includes: programcode for examining the minimum and maximum quantities.
 15. A system asin claim 1, wherein the requested close time is established by an event.16. The system of claim 1, further comprising program code forgenerating and disseminating market information based on a market beingserviced by the system.
 17. The system of claim 16, further comprisingprogram code for determining and disseminating information about changesin a quantity of product that could be transacted in response to changesin price.
 18. The system of claim 16, further comprising program codefor determining and disseminating information about a value ofparticular features of a product.
 19. A system for clearing offers,comprising: a processing unit; an input/output device coupled to theprocessing unit; a storage device in communication with the processingunit, the storage device including; program code for receiving aplurality of buyer offers and a plurality of seller offers, wherein eachof the offers includes a plurality of attributes including a requestedclose time; program code for locking individual buyer offers inchronological order of receipt of the buyer offers with amost-buyer-favorable of the then-available individual seller offers whenrespective conditions of acceptance defined by the plurality ofattributes are met; program code for unlocking a previously-locked buyeroffer/seller offer pair when a new seller offer is subsequently receivedthat has conditions of acceptance that are better than conditions ofacceptance of the seller offer of the previously-locked buyeroffer/seller offer pair and relocking the buyer offer to thenewly-received more-favorable seller offer, wherein such unlocking andrelocking is performed in chronological order of receipt of the buyeroffers; program code for, at a predetermined time based on respectiverequested close times of locked buyer offer/seller offer pairs, clearingsuch locked buyer offer/seller offer pairs; and program code fortransmitting transaction directives to respective buyers and sellers ofthe locked and now-cleared buyer offer/seller offer pairs.
 20. Thesystem of claim 19, wherein the requested close time is established byan event.
 21. The system of claim 19, wherein the buyer offers andseller offers are each associated with a pool and a corresponding poolclosing event.
 22. The system of claim 19, wherein the plurality ofattributes further includes a price function.
 23. The system of claim22, wherein the plurality of attributes includes a quantity value. 24.The system of claim 19, further comprising program code for generatingand disseminating market information based on a market being serviced bythe system.
 25. The system of claim 24, further comprising program codefor determining and disseminating information about changes in aquantity of product that could be transacted in response to changes inprice.